Ankara:Global markets began the week on a mixed note, influenced by signs of cooling in the US labor market and recent indications from Federal Reserve officials that they might pause interest rate hikes.
According to Anadolu Agency, the probability of the Federal Reserve maintaining its current policy rate this month has surpassed 80%. However, there is still a 95% likelihood of a 25-basis-point rate increase in December. Investors are keenly awaiting the Fed's latest meeting minutes and global Purchasing Managers' Index (PMI) data set to be released this week.
There is a renewed focus on riskier assets as expectations rise that the Fed will pause its hawkish measures. Meanwhile, ongoing geopolitical tensions in the Middle East have continued to impact market dynamics. The Iranian-backed Yemeni Houthi group claimed responsibility for attacks on Saudi Aramco facilities, contributing to Brent crude oil prices climbing back above $100 a barrel due to concerns over oil supply disruptions.
The US is reportedly planning to bolster its military presence in Israel, with additional troops and aircraft, in anticipation of further tensions in the Middle East. Israel is preparing for a potential conflict with Iran, conducting surveys of potential targets in the event of a large-scale confrontation, while maintaining military coordination with the US Central Command (CENTCOM).
Geopolitical tensions have also led to increased demand for the US dollar, pushing the US Dollar Index up by 0.5% to 102.5, its highest level since April 2025. As the dollar appreciated, other assets displayed increased volatility. Gold experienced a bearish start to the week, declining by 0.2% to $4,134 per ounce, while silver rose by 1.1% to $61 per ounce.
In the bond market, the US 10-year Treasury yield remained flat at 5.27%, and the two-year yield saw a slight decrease to 4.82%. Brent crude for December delivery was trading down 0.4% at $101.8 a barrel.
US stock indexes showed a mixed start to the week following gains last week, with the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average all recording increases. Investors are now shifting their focus to the Producer Price Index (PPI) and PMI data expected from Europe, which could provide insights into the European Central Bank's potential monetary policy direction.
European markets also opened on varied notes, with the UK's FTSE 100, Italy's FTSE MIB 30, France's CAC 40, and Germany's DAX 40 all experiencing gains. Meanwhile, the spread between French and German 10-year bond yields widened to its highest level since 2012, prompting analysts to suggest possible ECB intervention to manage risks associated with France's borrowing costs.
In Asia, trading activity was subdued due to market holidays in South Korea and China, although open markets displayed mixed results. Japan's services and composite PMI both fell, but consumer confidence surpassed expectations, leading to a decrease in the country's two-year bond yield. Japan's Nikkei 225 rose, while Hong Kong's Hang Seng saw a slight decline near Monday's close.