Global markets will track a busy data calendar from the US, Europe, Asia and Türkiye next week. The US will release the Richmond Fed manufacturing index, the manufacturing sector index, weekly initial jobless claims, new home sales, durable goods orders and the University of Michigan consumer sentiment index.
The Fed’s interest-rate decision remains in focus
This week, the US Federal Reserve raised its policy rate by 25 basis points to a range of 3.75%-4%, in line with expectations, marking its first rate hike since 2023. The decision was unanimous.
The Fed said economic activity was expanding at a solid pace, productivity growth was strong and capital investment remained robust. The bank raised its inflation forecast for this year from 3.6% to 3.7%, while keeping its 2027 forecast at 2.3%. Its 2028 forecast was increased from 2% to 2.1%, and the forecast for 2029 was set at 2%.
According to the dot plot showing Federal Open Market Committee members’ interest-rate expectations, 16 of the 18 officials projected at least one more rate hike this year. Fed Chair Kevin Warsh said inflation was too high and had remained at that level for a long time. Warsh said the rate hike was the right step toward achieving price stability.
US President Donald Trump called on the Fed to cut interest rates to 1% or lower. Expectations that the Fed will maintain its tight monetary policy lifted the dollar index by 1% for the week to 100.2.
Oil prices fell while gold gained
Amid continued concerns over clashes between Saudi Arabia and the Houthis in Yemen, expectations that alternative routes could be found for oil shipments from the Middle East pushed prices lower. November-delivery Brent crude ended the week down 1.4% at $103.2 a barrel.
Concerns that geopolitical tensions in the Middle East could make inflationary pressures persistent drove the yield on US 10-year Treasury bonds to 5.04% during the week; it closed the week at 5%. The price of gold rose 0.7% to $4,378 an ounce, supported by the decline in oil prices.
Reduced uncertainty over Fed policy and falling oil prices supported markets, while concerns that artificial intelligence companies could slow the pace of technology development, tensions in the Middle East and high bond yields limited risk appetite.
US and European stocks had a mixed week
On the New York Stock Exchange, the S&P 500 fell 0.08% for the week and the Dow Jones dropped 1.69%. The Nasdaq rose 0.72%.
European stocks also moved without a clear direction. The Bank of England kept its policy rate unchanged at 3.75%. Six members of the Monetary Policy Committee voted to hold rates steady, while three voted to raise the rate by 25 basis points to 4%.
BoE Governor Andrew Bailey said monetary policy could be tightened if the conflict in the Middle East lasted longer and the risk of second-round effects increased. Consumer prices in the euro area rose 0.4% month on month and 3.2% year on year in August.
US President Donald Trump’s reaction to the European Union’s desire for Canada to become its first associate member also revived concerns in Europe over tariffs. Next week, markets will track consumer confidence, manufacturing PMI data, the Ifo business climate index and Germany’s GfK consumer confidence index in Europe.
For the week, the FTSE 100 in the UK rose 0.08%, while France’s CAC 40 fell 1.40%, Italy’s MIB 30 declined 1.84% and Germany’s DAX lost 1.03%.
Interest-rate and growth data shaped Asian markets
Asian stocks traded mixed as oil prices remained above $100 and geopolitical risks persisted. The Bank of Japan raised its policy rate by 25 basis points to 1.25%. The rate decision, which lifted borrowing costs to their highest level in 31 years, was approved by a 7-2 vote.
The Bank of Japan said rate hikes could continue depending on economic activity and financial conditions. Japan’s August inflation rate came in at 1.9%, slightly below expectations.
China’s August unemployment rate came in at 5.3%, above expectations, while industrial production rose 5.2%. For the week, South Korea’s Kospi fell 0.2% and Hong Kong’s Hang Seng declined 0.22%. Japan’s Nikkei 225 rose 1.57%, while China’s Shanghai Composite gained 0.61%. Japan will release manufacturing PMI data next week.
Borsa Istanbul ends the week down 8.18%
Borsa Istanbul, which traded under selling pressure domestically, saw the BIST 100 index fall 8.18% for the week to close at 13,284.42 points. The dollar/Turkish lira exchange rate ended the week at 48.7649, up 0.52% from the previous close.
The Central Bank of the Republic of Türkiye said liquidity conditions would be closely monitored and that any additional measures deemed necessary would be taken. The Capital Markets Board decided to suspend trading in all investment funds managed by seven portfolio management companies on the Turkish Electronic Fund Trading Platform and to liquidate some of the funds.
The Banking Regulation and Supervision Agency decided that banks’ own shares repurchased after September 16 would not be treated as a deduction from core capital through December 31 or be included in calculations of amounts subject to credit and market risk.
Minister of Treasury and Finance Mehmet Şimşek said developments in the markets stemmed from credit and liquidity problems affecting a limited number of funds. He said there was no widespread systemic risk and no structural problem in the stock market or broader markets.
Next week, Türkiye’s real-sector confidence index, capacity utilization rate and consumer confidence index will be monitored.
