Ankara:Global markets experienced a downturn as expectations rose for another potential interest rate hike by the Federal Reserve before the year's end, compounded by escalating tensions in the Middle East.
According to Anadolu Agency, the White House has allegedly instructed the Pentagon to prepare military strike options against Iranian targets, with the possibility of implementation before the midterm elections on November 3.
The price of Brent crude oil reached $102 per barrel due to concerns over energy supply exacerbated by geopolitical risks, coupled with decreased ship traffic through the Strait of Hormuz impacting price dynamics.
Analysts suggest central banks may adopt a hawkish stance as rising energy prices are expected to contribute to inflationary pressures. This outlook is driving selling pressure in government bond markets, pushing borrowing costs to levels not seen in years.
The Federal Reserve released minutes from its September meeting, revealing a consensus among officials that inflation risks are skewed upwards, with some noting an increase in recent months. Despite rising long-term Treasury yields, officials believe financial conditions continue to support economic growth.
Current market estimates indicate an 81% likelihood that the Fed will maintain rates this month, but a 94% probability of a rate hike in December. US Treasury yields have reached significant highs, with the 10-year yield at 5.36% and the 30-year note at 5.73%, although the 10-year yield settled at 5.31% after a bond auction.
The US Dollar Index rose by 0.3% to 102.2 on Wednesday, maintaining a flat trajectory on Thursday. Brent crude for December delivery increased by 2.2%, reaching $102.4 per barrel.
US stock indices showed declines, with the S&P 500 and Nasdaq Composite falling by 0.22% and the Dow Jones Industrial Average dropping by 0.66% on Wednesday. European markets also faced selling pressure due to high oil prices and fiscal concerns, despite assurances about the French economy.
In August, Germany's industrial production exceeded expectations with a monthly increase of 2% and a year-on-year growth of 2.3%. IMF Managing Director Kristalina Georgieva highlighted the global economy's uncertainty amidst AI advancements, energy prices, and public debt, urging policy action to stimulate growth.
The EU Commission announced additional support for Ukraine, including $1.4 billion for drones and missile systems as part of a larger defense aid package.
European markets saw declines, with the UK's FTSE 100 down 0.79%, Italy's FTSE MIB 30 falling 2.51%, Germany's DAX 40 dropping 1.35%, and France's CAC 40 decreasing by 1.22%. Asian markets also traded lower, with Japan's Nikkei 225 and Hong Kong's Hang Seng Index both down 0.7%, South Korea's Kospi falling 1.2%, and China's Shanghai Composite decreasing by 0.4%. Japan reported a trade surplus of approximately $25.7 billion in August.