Global markets started the week on a positive note.

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For some time, the increasing confidence that inflationary pressures in the U.S. have lost their strength gave way to a cautious stance following the inflation data released last week.

FED MAY KEEP INTEREST RATE STEADY NEXT MONTH

In the U.S., the Producer Price Index (PPI) remained unchanged on a monthly basis in September, falling below expectations, while it increased by 1.8% on an annual basis, exceeding expectations. The core PPI, which excludes volatile food and energy prices, also rose by 0.2% month-on-month in September, aligning with forecasts, while it increased by 2.8% year-on-year, surpassing expectations. With these developments, although the probabilities that the Fed may keep its policy rate steady next month have been factored into pricing, expectations remain strong that it will implement a total of 50 basis points of cuts in the two meetings scheduled until the end of the year, with 25 basis points each. Analysts reported that the possibility of a "soft landing" for the U.S. economy has mitigated risk perception, despite concerns that the Fed's tightening monetary policy stance may take longer to soften than anticipated. While Fed officials continue their verbal guidance, Dallas Fed President Lorie Logan reiterated the view that interest rates should be gradually reduced to a neutral level.

U.S. COMPANY STOCKS VOLATILE

On the other hand, it is expected that the financial results of companies announced during the accelerating earnings season in the U.S. will increase stock and sector-based volatility. According to the earnings reports released last week, net profits of JPMorgan Chase and Wells Fargo declined in the third quarter compared to the same period last year. Despite the drop in profits, JPMorgan Chase's shares gained 4.4% after the bank's profit and revenue exceeded expectations and it raised its annual interest income forecast. Wells Fargo's shares also rose by 5.6% as the company exceeded expectations despite a decline in profits. Shares of asset manager BlackRock also increased by 3.6% after reporting that assets under management reached a record level for the third consecutive quarter. In the bond markets, selling pressure continues with these developments. Analysts noted that signals indicating that the slowdown in inflation may take a bit longer have been effective in the selling pressure in the bond markets, stating that signals from upcoming macroeconomic data will continue to be the focus of investors. The U.S. 10-year Treasury yield is currently at 4.11%, while the dollar index started the week at 102.9.

SLIGHT RISE IN GOLD

The price of gold per ounce finished Friday with a gain of 1.1%, currently trading at $2,660, which is 0.1% above the previous close. The price of Brent crude oil closed Friday at $78.6, down 0.3%, while today it is around $77.9, down 0.9%. On the New York Stock Exchange, the Dow Jones index gained 0.97%, the S&P 500 index gained 0.61%, and the Nasdaq index gained 0.33% on Friday. The Dow Jones and S&P 500 indices recorded record closes last week, while U.S. index futures started the week with limited declines. In European stock markets, a buying trend prevailed on Friday, while eyes are turned to the monetary policy decisions to be announced by the European Central Bank (ECB) this week.

EXPECTATIONS FOR INTEREST RATE CUT IN EUROPE

It is expected that the ECB will continue to cut interest rates at its monetary policy meeting this week, with market pricing indicating that three key policy rates will be reduced by 25 basis points. Analysts stated that signals from the policy text and ECB President Christine Lagarde's statements could influence the direction of asset prices, while also indicating that clues regarding future policies will be sought. Analysts pointed out that the data released in the region continues to fuel recession concerns, and investors are closely monitoring how the ECB will approach this situation. According to the data released last week, the inflation rate in Germany fell to 1.6% in September, marking the lowest level since January 2021. With these developments, on Friday, the FTSE 100 index in the UK rose by 0.19%, the DAX 40 index in Germany rose by 0.85%, the CAC 40 index in France rose by 0.48%, and the FTSE MIB 30 index in Italy rose by 0.68%. European index futures started the week with a mixed trend.

MIXED TREND IN ASIAN MARKETS

In Asia, a buying trend was observed except for Hong Kong, while there was no trading in Japan due to a holiday. Eyes in Asia are on the briefing held by the Chinese Finance Minister over the weekend, where it was noted that "no concrete steps have been taken to stimulate the markets." However, the emphasis on continued support for the markets in the future helped maintain strong risk appetite in the region. Chinese Finance Minister Lan Fo'an and ministry officials stated that the government will accelerate the implementation of existing policies with some gradual measures. Minister Lan pointed out that there is "room" for borrowing and increasing the deficit in the central government's budget, but did not mention a large-scale spending plan. He stated that they are working on various budget incentives to stimulate the economy, without providing details on what these are and in what amounts. Ministry officials announced that more bonds will be issued to solve local governments' debt problems, and that the debt ceiling will be raised to allow for debt swaps. Analysts noted that Chinese officials should focus on the briefings they will hold in the coming weeks, stating that investors need to be much more patient regarding the size of the fiscal stimulus package. Meanwhile, in China, the Consumer Price Index (CPI) rose by 0.4% compared to the same period last year, while the Producer Price Index (PPI) fell by 2.8%. With the stagnation in consumer prices and the ongoing decline in producer prices in September, deflationary trends continue to be felt. The CPI, considered a key indicator of inflation, has remained below 1% since February 2023, while the decline in producer prices has continued since October 2022. Near the close, the Hang Seng index in Hong Kong fell by 0.7%, while the Kospi index in South Korea rose by 1.2% and the Shanghai Composite index in China rose by 2.1%.

EXPECTATIONS FOR A DECLINE IN INFLATION IN TURKEY HAVE INCREASED

Domestically, the BIST 100 index on the Istanbul Stock Exchange, which followed a selling trend on Friday, closed the day at 8,876.22 points, down 0.98% compared to the previous close. The dollar/TL closed at 34.2834, up 0.3% on Friday, while today it is trading just above the previous close at 34.2870 in the interbank market. Meanwhile, the International Monetary Fund (IMF) reported that a further decline in inflation is expected within the framework of the gradual policy adjustment by Turkish authorities.

In a statement from the IMF, it was noted that the 4th Article consultation with Turkey was completed on September 27. The statement, which also included economic forecasts, indicated that the Turkish economy is expected to grow by 3% in 2024, 2.7% in 2025, 3.2% in 2026, 3.4% in 2027, 3.7% in 2028, and 3.9% in 2029. Analysts stated that the data agenda is calm both domestically and internationally today, noting that technically, the support levels for the BIST 100 index are at 8,870 and 8,710 points, while the resistance levels are at 9,000 and 9,165 points.