While the risk perception remains high in global markets due to the concerns about the banking sector in the US, investors focused Tuesday on the inflation data to be announced in the country.
The bankruptcy of Silicon Valley Bank and Signature Bank in the US continues to make pricing difficult in the markets. While the demand for bonds continued to strengthen with the increasing risk perception on Monday, uncertainty about the US Federal Reserve’s monetary policy steps grew. The US two-year bond yield stabilized at 4.18% after falling about 60 basis points to 3.98% on Monday. Despite some expectations that the Fed will not raise interest rates for the rest of the year, it is predicted that a 25-basis-point rate rise will be made with a 75% probability at the meeting to be held next week. There are also expectations that the Fed will cut interest rates as of the second half of the year.
Analysts reported that inflation data to be announced on Tuesday is expected to have an impact on markets. The annual inflation rate is expected to come in at 6% in February, according to the analysts. Commodity prices also followed a mixed course with the aforementioned fluctuations, while the price of gold increased 2.5% and closed at $1,913 per ounce on Monday, and stabilized at $1,902 with a 0.6% decrease on Tuesday. The price of Brent oil, on the other hand, is currently trading at $79.6 per barrel, 1% below the previous close, after losing 2.4% on Tuesday.
On Monday, with these developments, the S&P 500 index in the New York stock exchange decreased 0.15% and the Dow Jones index fell 0.28%, while the Nasdaq index rose 0.45%. Index futures contracts in the US began the new day with an increase. The expectations about the European Central Bank’s 50-basis-point rate hike on Thursday also decreased.
While bond yields across the region fell sharply on Monday, Germany’s 10-year bond yield fell about 25 basis points, and France’s 10-year bond yields dropped about 20 basis points. Concerns about the banking sector in the region persist on the agenda, as the German Federal Financial Supervisory Authority (BaFin) announced a moratorium on the German branch of Silicon Valley Bank on Monday. On Monday, the DAX 40 index in Germany decreased 3.04%, the FTSE 100 index in the UK fell 2.58%, the CAC 40 ithanksndex in France dropped 2.9%, and the MIB 30 index in Italy decreased 4.03%. Asian stock markets followed a sales-heavy course on Tuesday.
With the increasing risk perception, the demand for safe haven continued to strengthen, while Japan’s 10-year bond yield decreased to 0.25%. US President Joe Biden announced that he plans to meet with Chinese President Xi Jinping, and the visit would be welcomed in the markets, according to analysts.
With these developments, the Nikkei 225 index in Japan decreased 2.3%, the Shanghai composite index in China fell 0.6%, the Kospi index in South Korea dropped 2.4%, and the Hang Seng index in Hong Kong decreased 1.9%. BIST 100 index in Borsa Istanbul, which followed a sales-weighted course on Monday, ended the day at 5,323.19 points, down 1.14%. USD/TRY was trading at 18,9750 at the opening of the interbank market on Tuesday, after closing at 18.9681 with a flat course on Monday. The unemployment rate in the UK and inflation data in the US will be followed on Tuesday, analysts said.