In the past week, global markets were subject to hard sales with the FED meeting and Trump’s statements.
The FED made its decision to cut interest rates by 25 basis points in line with the forecasts at its meeting which ended on July 31, and signaled that it does not require any series of interest rate cuts. it showed. He stressed that the central bank wants to raise low inflation. The FED also announced that it would stop its massive $ 3.6 trillion bond portfolio of assets purchased to support the economy during the financial crisis, two months before it announced. The FED will thus support the economy not only by lowering interest rates but also through other policy instruments. “Let me make this clear, this does not mean the start of long-term interest rate cuts,” Powell said at a press conference following the interest rate decision, but said, “I did not say that only one interest rate cut would be made.”
The dollar index tested the highest level since May 2017 at 98,932 following the FED decision. The euro has fallen to the lowest level since May 2017 against the dollar at 1.1025. However, after the announcement of Trump’s Dollar index, the week of Chinese retaliation in the future with the expectation of regression closed the week. The Bank of England did not change interest rates and asset purchase targets in line with the expectations. President Carney said in his speech that the impact of the trade wars would gradually increase, if the UK left the EU with the unreasonable Brexit, the GBP would reach even lower levels and Brexit had to be smooth and contracted for an upward movement.
Before the meeting, copper rose to $ 6032, hoping that the FED would continue to pursue a loose policy during the rest of the year, and fell below $ 5900 after the meeting. On Thursday evening, Trump announced a 10% surcharge would be imposed on Chinese imports of approximately $ 300 billion starting in September. Following Trump’s announcement, LME copper, which came under strong sales pressure, closed the week with a 4% loss from $ 5722. Following Trump’s announcement of additional tax imposed on China, sales on the indices continued Thursday, driven by rumors that talks between China and the United States will be halted. China said on Friday it could retaliate if additional tax is applied. Manufacturing PMI data is still in the contraction zone in China, but indicates a slight recovery, but remained below expectations in the US. In the US, non-farm payrolls rose by 164,000 on Friday, while the unemployment rate met expectations at 3.7%. The 41-hour revision of the headline data over the last 2 months, as the average hourly income exceeded expectations, did not make the data effective enough to lead to a second rate cut.
In a conjuncture in which the downside risks increase in the world economy, the possibility that the trade fight between the US and China will turn into a currency war leads to an inevitable deterioration in global risk appetite. Asian stock markets dominated by Chinese indices this morning with losses of over 2%. On the macro side, PPI in the US, trade data in China on Thursday and inflation data on Friday will be monitored. Last week, the stock markets closed the week with depreciation after Trump announced a 10% surcharge on Chinese products. The news that China’s agricultural products will be stopped after Trump’s additional tax announcements and the USDCNH parity broke the 7-level up to 7.11 strengthened the position of the trade war. Yesterday, China allowed the Yuan to exceed the 7.00 level, and Trump called it “currency manipulation and a serious breach”, which led to deeper sales in the indices. In Europe and the US, all stock indices completed the first day of the week with losses. All of the eleven sectors in the S&P 500 index registered losses, while the index closed the day with a loss of 2.98%. The Dow Jones index was down by 2.89%, while Nasdaq was down by 3.47%.