All eyes in global markets on statements by Fed Chairman Powell

NEW YORK (AA): Global markets started Tuesday on a positive note as Federal Reserve Chairman Jerome Powell’s statements may give clues on the bank’s future policy.

Some central banks worldwide cut their interest rates in the first half of the year after a long break, though the unknown frequency of such cuts for the rest of the year is affecting asset prices.

US data released on Monday showed a slowdown in economic activity, and a job report this Friday is expected to give more signals on the US economy.

The Institute for Supply Management’s (ISM) manufacturing Purchasing Managers’ Index (PMI) fell below market expectations to 48.5 in June.

The slowdown in economic activity was significant for reducing inflation to the expected level, analysts say, noting that possible signs of cooling in the labor market would also give space to the Fed.

In the markets, the probability of a Fed rate cut in September is estimated at 71%, and 95% for a cut in November; the probability of the bank cutting its interest rates a possible second time in December is estimated at 80%.

Meanwhile, shares of US tech giants Apple and Microsoft gained 2.9% and 2.2%, respectively, while Amazon’s shares rose 2%.

US-based aircraft maker Boeing’s shares rose 2.6% after the firm announced that it would acquire parts manufacturer Spirit AeroSystems for about $4.7 billion.

Shares of online retailer Chewy soared 4% at the opening after Keith Gill, an investor using the online pseudonym “Roaring Kitty,” bought Chewy shares, though the firm completed the day down 6.6%.

Cryptocurrency lender Silvergate Capital, which ceased operations last year, on Monday was fined by two regulatory agencies for a total of $63 million.

Ten-year US Treasury bonds were at 4.49% on Monday, up 10 basis points, and at 4.45% on Tuesday.

Meanwhile, the US dollar index is at 105.9, up 0.1% from its previous close, while the ounce price of gold is down 0.2% at $2,327.

The barrel price of Brent crude oil rose 1.9% to $86.5 on growing concerns over the hurricane season in the Atlantic, in addition to rising tensions in the Mideast. On Tuesday, it traded at $86.6, up 0.2% from its previous close.

The Nasdaq index climbed 0.83%, the S&P 500 0.27%, and the Dow Jones index 0.13% on the New York Stock Exchange on Monday, though index future contracts started Tuesday down.

– European markets

As for European stock markets, they followed a buying-weighted course on Monday, and European Central Bank (ECB) President Lagarde’s statements on Tuesday could affect prices.

German data released on Monday showed that inflation slowed quicker than expected, as inflation concerns continue to ease across Europe.

Meanwhile, political developments in France are being closely monitored, as the possibility that the country’s far-right may fail to secure an outright majority continues to increase the risk appetite.

Declining inflation gave the ECB space for cuts, and Lagarde’s statements on Tuesday will cast light on the bank’s future decisions, analysts say.

The FTSE 100 index in the UK climbed 0.03%, the CAC 40 in France 1.09%, the MIB 30 in Italy 1.7%, and the DAX 40 in Germany 0.3% on Monday, while index futures contracts in Europe started Tuesday on a negative course.

As for Asian equity markets, a positive course stood out except for South Korea, while the US dollar/Japanese yen parity is being closely monitored.

Dollar/yen parity rose to a 38-year high of 161.72, raising questions about possible interventions by the Bank of Japan (BoJ), though the country’s recent macroeconomic data revealed that inflation accelerated, easing the bank’s policy space.

Analysts said the BoJ is expected to raise interest rates by 10 basis points in July, with a 62% probability in the money markets.

The Nikkei 225 index in Japan soared 1.1%, the Shanghai Composite index in China 0.2%, and the Hang Seng index in Hong Kong 0.5%, while the Kospi index in South Korea fell 0.7% near the close on Monday.

As for Türkiye, the BIST 100 index followed a sales-heavy course on Monday, completing the day at 10,343.31 points, down 2.86%.

The US dollar/Turkish lira exchange rate completed the day at 32.6553 on Monday and started Tuesday at 32.6730.