The markets' eyes are on 2 data after the software crisis! The Central Bank will make an announcement on Tuesday.

In global markets, a sales-oriented trend was observed due to increased geopolitical risks, global software issues, and the spread of the decline that started with technology stocks in the US stock markets. The focus is now on the growth data to be announced in the US next week.

As central banks approach the end of hawkish policies, the potential uncertainties created by the results of the US elections have dampened risk appetite in global markets. Concerns have arisen that trade wars between the US and China could reignite, leading to a selling pressure that spread to the overall markets. Analysts have stated that the growth data to be announced in the US will be the focus of the markets next week.

RISK PERCEPTION IN MARKETS INCREASED

Although Federal Reserve (Fed) Chairman Jerome Powell stated that they do not want to be late in starting interest rate cuts, the possibility of him winning the presidency increased after he was attacked during his speech to his supporters at a rally in Pennsylvania last weekend. This possibility has increased the risk perception in global markets that trade wars and geopolitical risks may rise again.

In his speech at the Washington Economic Club, Powell stated that the three data points in the second quarter of this year have "somewhat increased confidence" that inflation has fallen to 2%. Powell also indicated that the bank could react if there is an unexpected weakness in the labor market. When asked about the market pricing regarding the possibility of the Fed making its first interest rate cut in September, Powell said, "I will not give any signal about any meeting in any way."

It is stated that the macroeconomic data announced in the US has eased the policy area of the Federal Reserve. While the announced data indicates that the labor markets are cooling down slowly, Chicago Fed President Austan Goolsbee stated that the bank may need to cut interest rates in the near future to prevent a sharper deterioration in the cooling labor market.

"TIME FOR THE FED TO CUT INTEREST RATES IS APPROACHING"

Fed Board Member Christopher Waller stated that the time for the bank to cut interest rates is "approaching". New York Fed President John Williams also stated in an interview with The Wall Street Journal that with signs that labor market conditions are gradually cooling down and the last three-month inflation data approaching the deflationary trend the bank is looking for.

EXPECTED TO MAKE 3 INTEREST RATE CUTS THIS YEAR

Following these developments, it is certain that the Federal Reserve will make at least two interest rate cuts this year in the money markets, and predictions that there may be three interest rate cuts continue to gain strength. After these developments, expectations that the policy rate will be in the range of 4.50-4.75% at the end of the year increased to 49%, becoming the strongest possibility, indicating that the expectation is for the Fed to make 3 interest rate cuts.

SOFTWARE CRISIS

The software issue in CrowdStrike systems, which provides cybersecurity software to companies including US-based airlines, airports, banks, some media organizations, and the London Stock Exchange, has also increased the risk perception in global markets. After the disruption in the systems of cybersecurity giant CrowdStrike, a major interruption affecting businesses worldwide occurred. Due to the software issue, there were significant delays and cancellations in flights at many airports.

CrowdStrike announced that they have identified the problem and developed a "temporary" solution for users. CrowdStrike CEO George Kurtz stated in a statement from his X account that the problem was not a security incident or a cyber attack. In the statement made by Microsoft 365, it was stated that the underlying cause of the problem has been fixed.

RISE IN CRYPTOCURRENCY MARKETS

With these developments, the US 10-year Treasury bond yield ended the week at 4.24% with a 5 basis point increase. Last week, the price of gold decreased by 0.4% to $2,400.78, and the price of Brent crude oil decreased by 3% to $82 per barrel. While the rising trend in the cryptocurrency markets has been prominent since the weekend, the price of Bitcoin has increased by over 11% on a weekly basis, surpassing $67,000.

DECLINE IN TECHNOLOGY STOCKS ON THE NEW YORK STOCK EXCHANGE STANDS OUT

The earnings season, sector-based volatility, and stock-based volatility continued on the New York Stock Exchange last week. Although the net profit of Morgan Stanley, one of the major banks in the US, increased by 41% in the second quarter of this year, it decreased by 1.9%. Bank of America's net profit also decreased by 6.7%, but the company's shares increased by 3.2% last week.

While the possibility of Trump's re-election strengthens concerns about the start of trade wars, the prominence of protectionist rhetoric in Biden's policies has led to an increase in selling pressure on technology stocks.

After the global software issue caused by CrowdStrike, Microsoft's shares ended the week with a 3.6% decrease, and CrowdStrike's shares with a 17.9% loss.

FOCUS WILL BE ON INTEREST RATE DECISION IN DOMESTIC MARKETS

While the rising trend stands out domestically, the BIST 100 index on the Istanbul Stock Exchange completed the week with a 0.83% gain, achieving the highest daily and weekly closing in history at 11,156.20 points and reaching a record high level of 11,252.11 points.

The USD/TRY ended the week at 33.0249, 0.07% below the previous closing. The total reserves of the Central Bank of the Republic of Turkey (CBRT) reached a record high of $153.796 billion with an increase of $5.348 billion in the week of July 12 compared to the previous week.

MOODY'S UPGRADES TURKEY'S CREDIT RATING TO B1

Meanwhile, international credit rating agency Moody's upgraded Turkey's credit rating from "B3" to "B1" while maintaining the credit rating outlook as "positive".

Treasury and Finance Minister Mehmet Şimşek stated that Moody's, which raised Turkey's credit rating by two notches for the first time, "has raised our country's credit rating for the first time in 11 years thanks to the program we have implemented and kept the outlook positive."

THE CENTRAL BANK IS EXPECTED TO KEEP INTEREST RATES STABLE

Analysts state that the market participants survey on Monday, the interest rate decision to be announced by the CBRT's Monetary Policy Committee on Tuesday, and the real sector confidence index and capacity utilization rate to be announced on Thursday will be followed, and from a technical perspective, the BIST 100 index will be at 11.

250 and 11. 350 points noted that the resistance, 11. 000 and 10. 900 levels are in a support position. All economists participating in AA Finance's expectation survey expect the CBRT policy rate to remain unchanged at 50 percent.

The median of economists' year-end policy rate expectations is calculated as 45 percent.