Global markets on mixed course last week amid political crises

ISTANBUL 

Global markets were on a mixed course last week despite the soft-landing optimism in the US economy as political crises in South Korea and France, as well as the rising geopolitical tensions in the Middle East affected prices.

The estimates for a 25-basis-point cut by the Fed in December stand at an 85% probability in the money markets, following Fed Chairman Jerome Powell’s statement that the US economy’s current positive state enables the bank to exercise more caution in interest rate cuts.

Meanwhile, US President-elect Donald Trump said he would not dismiss Powell from his post after taking office, which relatively eased concerns about possible discrepancies between the Fed and Trump’s policies. Trump also said he could not guarantee that the additional tariffs on the US’ major trading partners would not increase prices.

Some Fed officials stated that the progress in inflation has seemingly stalled, posing bigger concerns compared to the labor market, noting the need for caution, and that the bank should issue cuts gradually.

The US non-farm payrolls rose 227,000 people in November, above expectations, while the unemployment rate climbed from 4.1% to 4.2% and the average hourly earnings increased 0.4% to $35.61, according to official figures released on Friday.

Analysts said that the US labor market recovered last month after being affected by hurricanes and worker strikes in October.

The University of Michigan Consumer Index rose to 74 in December, above market expectations, while consumer loans exceeded expectations with a $19.2 billion increase in October.

The ounce price of gold started the new week on Monday at $2,640, up 0.2% from its previous close led by recent developments in the Middle East, having followed a narrow band since the end of November, while the US 10-Year Futures bond started the day at 4.15%.

Bitcoin, which broke records one after another after Trump’s win, rose to over $103,000, though it fell to $99,170.

Brent crude oil rose 0.2% on Monday to $71.2 per barrel, after declining for the last three business days following the OPEC+ group and some non-OPEC oil producers’ decision to postpone production.

The US Dollar Index climbed 0.2% on Monday to 106.2.

Meanwhile, a US federal appeals court upheld the decision to ban the Chinese social media platform TikTok due to alleged data collection of US-based users, which led to a 2.5% rise to Meta Platforms’ shares.

Tesla shares rose 5.3%, Amazon 2.9+, and Alphabet 1.3%, while Nvidia shares declined 1.8% on the optimism that the Fed will continue rate cuts in December.

American insurance firm UnitedHealth’s shares declined after the company CEO was shot and killed last week, ending the week at 5.1% decline on Dec. 6.

On the New York Stock Exchange, the S&P 500 rose 0.25% and the Nasdaq 0.81%, while the Dow Jones lost 0.28% on Friday.

As for Europe, a positive course was seen on Friday except for the UK. Official data in the region supported recession concerns, while the uncertainties over the future decisions of the European Central Bank (ECB) remain.

French President Emmanuel Macron, Ukrainian President Volodymyr Zelenskyy, and Trump discussed the war in Ukraine in a meeting in Paris.

Meanwhile, UK-based Recruitment and Employment Confederation and services firm KPMG recorded the sharpest declines in job vacancies since August 2020, led by a drop in permanent positions.

On European stock markets, the DAX 40 rose 0.13%, the CAC 40 1.31%, and the FTSE MIB 30 0.36%, while the FTSE 100 in the UK fell 0.49% on Friday.

As for Asia, a negative course was prevalent except for Japan, as its economy grew 1.2% in the third quarter of the year, while China’s consumer price index (CPI) climbed 0.2%, below expectations and the country’s producer price index (PPI) fell 2.5%.

South Korean President Yoon Suk Yeol avoided an opposition-led attempt to impeach him over his sort-lived imposition of martial law.

Authorities in the country imposed a travel ban on Yoon on Monday.

Meanwhile, gold purchases by the People’s Bank of China (PBoC) continued after a six-month break, as the country’s gold assets rose to around 72.96 million fine troy ounces at the end of November, following 72.80 million ounces in October. The value of China’s gold reserves declined from $199.06 billion at the end of October to $193.43 billion at the end of November.

On Asian stock markets, Japan’s Nikkei 225 remained flat near the close, while South Korea’s Kospi index fell 2.5%, Chiba’s Shanghai Composite Index 0.2%, and the Hang Seng Index 0.6% on Friday.

Analysts said that the points of 10,150 and 10,200 are in the resistance position while 9,900 and 9,800 are in the support position for the BIST 100.

*Writing by Emir Yildirim