Fed and ECB are on the radar of the markets

Along with the guidance in the policy texts of the Fed and the ECB, the statements to be made by the central bank governors after the meeting and the clues regarding the meeting in March will be in the focus of investors.

Analysts noted that there are question marks as to whether the Fed’s rate hikes will be suspended in March, adding that the non-farm employment data to be announced on Friday, along with the guidance of Fed Chairman Jerome Powell, is likely to affect market expectations.

On the ECB side, while it is predicted that interest rate hikes will continue in March, possible signals about where the bank might end interest rate hikes will also be important.

US economy growth exceeds forecasts

While the data announced in the country last week supported the stock markets by increasing the expectation that the economy could make a “soft landing”, the financial results of the announced company increased the volatility based on shares and sectors.

Accordingly, while the US economy grew more than expected with 2.9 percent in the 4th quarter of 2022, new home sales increased by 2.3 percent monthly in December 2022 to 616,000, the highest level in four months.

While the growth in personal consumption expenditures in the country declined to 2.1 percent on an annual basis, expectations that the downward trend in inflation would accelerate became stronger.

Electric car maker Tesla increased its revenues by 37 percent in the fourth quarter to $24.3 billion, with market expectations of $24.7 billion in revenue.

The net profit of Microsoft, one of the US technology companies, decreased by 12 percent in the October-December period of last year compared to the same period of the previous year.

General Electric surpassed expectations with $21.8 billion in revenue in the said period, while Johnson & Johnson’s revenue exceeded market projections with $23.7 billion. under left.

Reminding that the balance sheet period continues with the busy calendar, analysts said that the financial results of Apple, Amazon, Alphabet and Meta companies that will be announced next week may have an impact on the direction of the markets.

In the data calendar of the week starting with January 30, Wednesday’s ADP private sector employment report and ISM manufacturing industry Purchasing Managers Index (PMI), factory orders and durable goods orders on Thursday and unemployment rate on Friday will be followed.

– The agenda is intense in Europe

While the upward trend in European Stock Exchanges stood out last week, except for England, next week, eyes were turned to the growth and inflation data to be announced across the region, as well as the monetary policy decisions of the ECB and the Bank of England (BoE) on Thursday.

Analysts noted that the earlier signals of softening in inflation in the region were not found enough by the ECB and the BoE, and said that both central banks may slow the rate of interest rate hikes at their meeting in March, following the 50 basis point rate hike.

Noting that the signals received last week regarding the regional economy were mixed, analysts stated that the downward course in natural gas prices provided relief in terms of production costs and inflation in the regional economies.

With the expectations that the ECB will continue its hawkish policies, its parity decreased slightly after seeing the 10-month peak at 1.0931, and closed the week at 1.0868 with an increase of 0.1 percent.

Consumer confidence index and growth in Germany on Monday, growth in Eurozone on Tuesday and Consumer Price Index (CPI) in Germany, manufacturing industry PMI in the region on Wednesday and unemployment rate in the Euro Area with CPI and Friday in the region. Service sector PMI and PPI data will be followed across the country.

– Domestically, eyes turned to inflation data

While a sales-weighted course stood out in the domestic market last week, the BIST 100 index in Borsa Istanbul finished the week at 5,191.83 points with a decrease of 5.44 percent.

The January CPI and PPI data, which will be announced on Friday, will be the focus of investors. In December, annual inflation receded to 64.27 percent due to the base effect.

In the next week, foreign trade balance on Tuesday and manufacturing industry PMI data on Wednesday will be followed.