Ankara: Global markets are affected by central bank monetary policy decisions and geopolitical developments in the Middle East after the Fed maintained its rate within estimates at the 3.5-3.75% range.
According to Anadolu Agency, the Fed's monetary policy decision was approved by a vote of nine to three. Cleveland's Beth Hammack, Minneapolis' Neel Kashkari, and Dallas' Lorie Logan voted in favor of hiking rates by 25 basis points during the two-day meeting of the Federal Open Market Committee. Fed Chair Kevin Warsh reassured that the bank is committed to ensuring price stability, with no easing of the inflation target on the horizon.
Disagreements among Fed members fueled uncertainties over the bank's policy, leaving investors guessing whether it will hike rates to combat inflation. Markets are unsure of the timing of any future policy moves as some members pushed for maintaining rates and others for hiking them, while Warsh delivered some cautious statements. The chair's failure to provide concrete details on how exactly the bank will combat inflation under his tenure made speculation difficult.
Stock markets came under the weight of comments that the Fed is supposedly falling behind in its fight against inflation, while the bank's probability to hike rates in September fell from 80% to 65%. Mounting oil prices amid the Middle East conflicts fueled concerns over inflationary pressures, while US President Donald Trump said Washington will strike Iran even harder after Tehran hit US forces in Jordan.
Washington imposed sanctions on two companies that allegedly facilitate Iran's revenue generation from the Strait of Hormuz, as well as eight vessels and eight associated firms, which are alleged to have been playing a role in transporting Iranian crude oil and petrochemicals. The US Central Command said it launched a new wave of attacks on military targets in Iran. The US 10-Year Treasury yield climbed eight basis points to 4.69% on Wednesday, rising two more basis points to 4.71% on Thursday, while the 30-Year Treasury yield hit its highest since 2007 at 5.2359% on Thursday.
The price of October-delivery Brent crude rose 7.3% to $88 a barrel on Wednesday amid rising tensions, falling 0.8 to $87.3 on Thursday. The US Dollar Index fell 0.6% to 100.8 on Wednesday due to developments at the Fed, while it's trading up 0.1% at 100.9 on Thursday amid Middle East tensions. Gold declined 0.6% to $4,043 per ounce on Thursday as bond yields and greenbacks rose.
Chip stocks saw a selloff, affecting the broader market in addition to geopolitical developments. Nvidia shares fell 3.6%, Micron Technology dropped 9.9%, AMD decreased 5.5%, and Applied Materials was down 8.4%. US tech giant Meta's net income fell 14% year-on-year to $15.85 billion in the second quarter. Microsoft's net income climbed 31% to $35.8 billion in the three-month period ending June 30. Meta shares dropped 7.2% and Microsoft fell 7.5% in after-hours trading.
At Wednesday's close, the Dow Jones Industrial Average fell 2.19%, the S and P 500 dropped 1.52%, and the Nasdaq declined 1.74%. American futures opened Thursday on an upward trend, while all eyes turned to the US economic growth data to be released on the same day. Meanwhile, risk appetite in European markets was dampened by rising oil prices.
French luxury brand Hermes posted flat net income for the first half of the year despite an uptick in sales. Hermes shares dropped 11.4% after it warned its Chinese market operations were weak. Gucci's parent company Kering's shares rose 16.9% after an increase in the French luxury brand's sales. Deutsche Bank shares climbed 1.1% following better-than-expected financial results.
The Bank of England (BoE) will make an interest rate decision on Thursday, while the eurozone's growth data will be released on the same day. The BoE is expected to maintain rates at 3.75%, while all eyes are on whether the two members who voted for a 25-basis-point hike in the previous meeting changed their stance.
Amid these developments, France's CAC 40 fell 0.6%, Germany's DAX 40 dropped 0.01%, and Italy's FTSE MIB 30 declined 0.49%, while the UK's FTSE 100 gained 0.34% on Wednesday. European indexes opened Thursday lower. Asian stock markets also saw a selloff amid concerns over the sustainability of artificial intelligence spending.
Seoul reiterated its plans to take measures restricting individual investor access to leveraged exchange-traded funds via limits on individual investments. The South Korean Finance Ministry said that the trading concentrating in leveraged products based on a single stock fueled market volatility. Meanwhile, South Korean tech giant Samsung's second-quarter earnings defied expectations, but its shares still fell 0.1%. Near Thursday's close, Japan's Nikkei 225 gained 1.1%, while South Korea's Kospi fell 1.1%, China's Shanghai Composite declined 1.2%, and Hong Kong's Hang Seng dropped 0.03%.
Source: Anadolu Agency