The results of the Congressional midterm elections in the USA continue to affect asset prices. According to inconclusive results, the success of the Democrats in the elections has weakened President Donald Trump's political hand in implementing his policies.
On the other hand, it is considered that the political separation between the presidential office and the majority in the House of Representatives and the Senate in the USA may prevent major politically motivated policy changes in the country. As the election results become clear, movements in asset prices attract attention. While the bond markets in the USA followed a buying-oriented trend, there was a sharp decline in the US 2- and 10-year bond interest rates.
The US 2-year bond yield decreased by 10 basis points to 4.56 percent, and the 10-year bond yield decreased by 13 basis points to 4.85 percent, falling to the lowest levels in the last 2 months. Investors' re-evaluation of the growth outlook of the US economy and the Trump administration's fiscal policies after the midterm elections increased the pressure on the dollar.
While the dollar index fell to 101.09 yesterday, reaching its lowest levels in the last 5 weeks, the weakening of the dollar brought a strong purchase in global assets to commodities priced in dollars. The ounce price of gold, which increased by 3.6 percent yesterday to 4 thousand 64 dollars, finds buyers at 4 thousand 137 dollars with an increase of 1.8 percent on the new day. Silver is traded at $53 per ounce with a 1.5 percent gain in value.
In addition, there was a decline in oil prices following the election results. Yesterday, the barrel price of January delivery Brent oil decreased by 8.7 percent to 94.6 dollars, and on the new day it decreased by 0.9 percent to 93.8 dollars.
Analysts stated that the Democrats' majority in both houses of the US Congress strengthened the expectations that the war in the Middle East could end, and this optimism put downward pressure on energy costs.
"Regulation" risks have emerged in artificial intelligence investments
On the other hand, although the election uncertainty has disappeared, question marks in the field of artificial intelligence and technology remain. Democrats' distance from artificial intelligence development has increased the regulation risks in investments in this field.
While the course of investments supporting the development of artificial intelligence technologies is expected to be one of the important topics in the focus of the markets in the coming period, it is thought that the election results may lead to a slowdown in data center investments.
In yesterday's transactions, the shares of Applied Digital, one of the data center operators, lost 6.74 percent and the shares of Core Scientific lost 10.39 percent.
In addition, US Vice President JD Vance attributed the Republican Party's loss in the midterm elections to the war with Iran and relations with Israel, while Trump said that the defeat against the Democrats was largely due to the "Iran war" and the "high cost of living" caused by the war.
On the macroeconomic data side, indicators regarding the state of the labor market were followed before the non-farm employment data to be announced on Friday in the USA. According to the data announced yesterday in the country, private sector employment increased by 86 thousand people in October, exceeding market expectations.
The US Institute of Supply Management (ISM) service sector Purchasing Managers Index (PMI) fell to 54.5 in October, below market expectations, indicating that the growth rate in the sector was slowing down.
With these developments, the S&P 500 index in the New York Stock Exchange increased by 1.58 percent, the Nasdaq index increased by 1.44 percent and the Dow Jones index increased by 3.03 percent. Index futures contracts in the USA started the day mixed.
Tightening step expected from the Bank of England
Expectations that geopolitical and economic changes may occur as the election uncertainty in the USA is resolved and the relief in the bond markets were welcomed positively in the European stock markets. European stock markets followed a positive trend yesterday and climbed to the highest level in the last 2 months.
While European indices gained value led by the banking sector, the decline in US bond interest rates was also reflected in European bond markets.
Analysts stated that the expectation that the decline in bond yields across Europe could increase the market value of fixed income securities in banks' portfolios brought buying into banking stocks.
On the other hand, according to preliminary data in the Eurozone, annual inflation increased to 4 percent in October. Price increases in energy products affected the acceleration in inflation. Thus, the inflation rate in the region reached twice the European Central Bank's (ECB) 2 percent target.
Today, the monetary policy decisions of the Bank of England (BoE) and September producer inflation data in the Eurozone will be followed in the region. Analysts estimate that the BoE will increase the policy rate by 25 basis points in the pricing in money markets.
With these developments, the FTSE 100 index in England increased by 1.79 percent, the DAX 40 index in Germany increased by 2.38 percent, the CAC 40 index in France increased by 1.96 percent and the FTSE MIB 30 index in Italy increased by 2.18 percent.
Semiconductor stocks fell sharply in South Korea
A negative trend is observed in Asian stock markets on the new trading day, except for Hong Kong.
With concerns that artificial intelligence investments in the USA may be disrupted, question marks have increased that demand in the semiconductor industry may be reduced. From this point of view, the decline in the Kospi index exceeding 5 percent in semiconductor-dominated South Korea attracted attention.
In South Korea, semiconductor company SK Hynix lost 9.1 percent, Samsung Electronics shares lost 7.1 percent and technology company LG Electronics shares lost 1.3 percent.
According to the data announced today in the region, the Purchasing Managers Index (PMI) of the service sector in Japan decreased to 51.7 in October and the composite PMI decreased to 52.1.
With these developments, near the closing, the Nikkei 225 index in Japan decreased by 1.6 percent, the Shanghai composite index in China decreased by 0.2 percent, the Kospi index in South Korea decreased by 5.3 percent, and the Hang Seng index in Hong Kong increased by 2.9 percent.
Within the scope of extraordinary liquidation, 62.2 billion liras were paid to 390 thousand 219 investors
BIST 100 index at Borsa Istanbul, which followed a buying-oriented trend yesterday, closed the day at 11,478.13 points, gaining 4.12 percent in value.
The December futures contract based on the BIST 30 index in the Borsa Istanbul Futures and Options Market (VIOP) rose by 0.51 percent in last night's session compared to the normal session closing.
On the other hand, interim payments continue to be made to fund owners in the country. Within the scope of extraordinary liquidation, 62.2 billion liras were paid to 390 thousand 219 investors. The entire principal amount of 133 thousand 839 of these investors was covered. Within the scope of ordinary liquidation, a total of 55.4 billion lira was paid to 55 thousand 821 investors.
Dollar/TL ends yesterday at 50.0170, and today, at the opening of the interbank market, it is traded at 50.0430, 0.1 percent above the previous closing.
Analysts stated that weekly money and bank statistics in the country, PPI in the Eurozone, BoE interest rate decision and the speeches of BoE President Andrew Bailey and European Central Bank (ECB) President Christine Lagarde will be followed abroad today, and noted that technically, 11,600 and 11,700 points in the BIST 100 index are resistance and 11,300 and 11,200 points are support.
The data to follow in the markets today are as follows:
10.00 Germany, September factory orders
13.00 Eurozone, September Producer Price Index (PPI)
14.30 Türkiye, weekly money and bank statistics
15.00 UK, BoE interest rate decision for November
15.30 England, BoE Governor Bailey's speech
16.30 USA, weekly unemployment claims
21.00 Euro Zone, speech by ECB President Lagarde
