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- Asian markets recover as Chinese economy beats Q3 growth forecasts, Mideast tensions ease after Iran signals openness to diplomacy, while French protests pressure European markets
By Ali Canberk Ozbugutu and Emir Yildirim
ISTANBUL (AA) - Global markets started Monday with a recovery trend amid efforts to establish a new peace plan in the Middle East alongside positive Chinese macroeconomic data releases.
Risk appetite declined last week as the US inflation came in hotter-than-expected, geopolitical risks in the Middle East intensified, and concerns over artificial intelligence investment profitability kept investors on edge.
AI-related stocks sharply declined last week and markets entered a search for balance.
Markets enjoyed some relief with positive expectations of major US corporate earning reports to be released throughout the week, while a decline in bond yields contributed to the optimism.
Attention turned to the Fed’s monetary policy meeting next week, during which the bank is expected to maintain its policy rate, while the possibility of a 25-basis-point rate hike in December is expected with near certainty, analysts say.
Investors are also on the lookout for the preliminary sectoral Purchasing Managers’ Index (PMI) data to be released alongside the financial results of Meta and Tesla on Wednesday.
Meanwhile, some new optimism in the Middle East came to the fore after Iranian Foreign Minister Abbas Araghchi said Sunday that Tehran is ready for diplomacy though adding that the country is also prepared for a new attack, while a seven-day plan was proposed to Washington.
December-delivery Brent crude oil started the new week down 1.9% at $107.8 a barrel following these developments.
US President Donald Trump said some significant progress has been made regarding peace talks between Russia and Ukraine, but he criticized Ukrainian President Volodymyr Zelenskyy for targeting diesel plants in Russia and for not ending the war.
The US 10-Year Treasury bond yield fell to 5.09% last week as its safe haven feature came to the fore amid falling tech stocks, but the yield dropped on Monday to 5.07%.
The US dollar declined 0.1% to 101.7 with a partial easing of geopolitical tensions and growing expectations that the Fed will maintain rates.
Gold climbed 0.4% to $4,183 per ounce amid the decline in yields and the dollar’s weakness.
The S&P 500 fell 1.09%, the Nasdaq Composite declined 2.15%, and the Dow Jones Industrial Average was down 0.34% on Oct. 16. American indexes started Monday on a positive note.
Meanwhile, European stock markets traded positively on Oct. 16, but the growing protests in France over the weekend are threatening the markets.
The involvement of farmers in the civil unrest could accelerate inflation, analysts say.
Sectoral PMI data is set to be released this week, and European Central Bank (ECB) President Christine Lagarde is expected to make statements during a discussion in Germany on Wednesday.
The UK's FTSE 100 gained 0.38%, Italy's FTSE MIB 30 rose 0.93%, France's CAC 40 increased 0.28%, and Germany's DAX 40 was up 0.95% on Oct. 16. European indexes started the new week on a negative trend.
At the same time, Asian equity markets traded positively except for Japan, while Hong Kong markets closed due to a holiday.
China’s economy grew 4.5% year-on-year in the third quarter, coming in better than expected, according to data released on Monday.
The pressure on Beijing to implement more aggressive stimulus measures to meet the growth target eased.
China’s retail sales grew 1.1% in September, above estimates, while the country’s industrial production rose 5.5% during the same period, accelerating compared to the previous month.
Japan’s Nikkei 225 dropped 0.7% after Prime Minister Sanae Takaichi said the government was not responsible for rising interest rates amid the yen’s weakening, while South Korea’s Kospi gained 0.8% and China's Shanghai Composite was up 0.7% near Monday’s close.
Ali Canberk Özbuğutu
