US midterm elections are on the radar of global markets

While global markets were mixed this week as mixed signals from the balance sheets announced by US technology companies increased question marks regarding the return of artificial intelligence investments to profitability, all eyes turned to midterm elections and non-farm employment data in the US.

Developments regarding technology companies continue to determine the direction of global markets.

Optimism about technology companies increased at the beginning of the week when Anthropic, the developer of Claude artificial intelligence models, filed a registration statement with the US Securities and Exchange Commission (SEC) with the aim of offering its shares to the public.

However, the mixed signals coming from the balance sheets announced by US technology companies later increased the question marks regarding the return of artificial intelligence investments to profitability.

With this development, a mixed trend was observed in global markets.

No surprises at the Fed

The focus of the markets this week was the interest rate decision of the US Federal Reserve (Fed).

The Fed kept the policy rate constant at 3.75-4 percent, in line with expectations. US Federal Reserve (Fed) President Kevin Warsh stated that they decided to change the meeting calendar starting next autumn, and that 1 of the 8 meetings to be held next year will focus on the general monetary policy strategy, and that a vote on the interest rate decision or a policy statement is not expected to be issued at this meeting.

Fed President Warsh refrained from giving guidance for the next period. Pointing out that Americans have been facing inflation that has been above the Fed's target for about 6 years, Warsh said, "It is our responsibility to reduce inflation." he said.

On the other hand, macroeconomic data announced in the USA were also followed closely this week. The US economy grew above expectations with 3.4 percent in the third quarter of this year. The core personal consumption expenditures price index, which the Fed closely monitors as an inflation indicator and excludes food and energy items, increased by 0.3 percent on a monthly basis and 3.1 percent on an annual basis in September, in line with expectations.

Following the announced data, while inflationary risks in the USA still remain strong, the possibility of the Fed increasing interest rates in December has increased.

On a weekly basis, the US 10-year bond interest rate decreased by 7 basis points to 4.93 percent, as investors turned to safe haven assets due to concerns about technology companies.

The dollar index completed the week with a horizontal course at 101.9.

With the uncertainties regarding geopolitical developments in the Middle East, the barrel price of December term Brent oil increased by 0.5 percent to 117.6 dollars this week.

As expectations grew stronger that the Fed would raise interest rates in December, the ounce of gold finished the week at $3,876, with a 3 percent decrease. An ounce of gold also hit its lowest level in a year at 3 thousand 870.3 dollars.

It is expected that the non-farm employment data to be announced next week in the USA will be decisive in the direction of the markets and will affect the expectations regarding the Fed's monetary policy.

The results of the Congressional midterm elections to be held in the USA on November 3 are also expected to have an impact on the markets.

New York stock market remained negative

The New York Stock Exchange finished the week negative on concerns about companies' artificial intelligence infrastructure spending.

Profits of Google's parent company Alphabet fell 25 percent in the third quarter, below market expectations.

Intel's net profit decreased by 18 percent on an annual basis in the third quarter of the year. While Amazon's net sales increased by 12 percent in the third quarter of this year compared to the same period last year, its net profit decreased by 2.4 percent.

On a weekly basis, Alphabet's shares lost 12 percent, Intel's shares lost 20.4 percent, and Amazon's shares lost 6.6 percent.

With these developments, the Dow Jones index decreased by 0.85 percent, the S&P 500 index decreased by 0.57 percent and the Nasdaq index decreased by 2 percent on a weekly basis.

Next week, ISM manufacturing industry PMI will be announced on Monday, JOLTS job openings, factory orders on Tuesday, foreign trade balance on Wednesday, ISM service sector PMI, weekly unemployment benefit applications on Thursday, non-agricultural employment and University of Michigan consumer confidence index on Friday.

BoE's interest rate decision will be the focus of European markets

European stock markets followed a positive course due to the generally good company balance sheets.

The European Central Bank (ECB) kept its three main policy rates constant, in line with expectations, despite the energy crisis and rising price pressures triggered by the tension in the Middle East.

ECB President Christine Lagarde pointed out the increasing inflation risks in the Euro Zone and signaled that a new interest rate increase is on the table in December. On the other hand, in the statement made by the ECB, it was announced that Lagarde, whose term of office will expire in October 2027 under normal circumstances, will leave her post as of February 7, 2027.

On the macroeconomic data side, the German economy grew above expectations in the third quarter of the year, with 0.2 percent compared to the previous quarter and 1.3 percent on an annual basis.

The Euro Zone also exceeded expectations by growing by 0.4 percent in the third quarter of the year and by 1.3 percent on an annual basis. The regional economy grew by 0.6 percent in the second quarter. However, the slowdown in the Eurozone economy compared to the previous quarter caused concerns about economic activity in the region to continue.

With these developments, the CAC 40 index in France increased by 2.40 percent, the DAX 40 index in Germany increased by 2.53 percent, the FTSE MIB 30 index in Italy increased by 1.94 percent, and the FTSE 100 index in the UK increased by 0.37 percent.

Next week, manufacturing industry PMI in the Euro Zone, Germany and England, inflation in the Euro Zone on Wednesday, service sector PMI in the Euro Zone, Germany and England, interest rate decision of the Bank of England (BoE) on Thursday, and retail sales in the Euro Zone on Friday will be followed.

The BoE is expected to increase the policy rate by 25 basis points due to increasing inflationary pressures resulting from energy costs.

Asian stock markets remained positive except China

Asian stock markets remained positive, excluding China, due to the rise in technology stocks in the region.

In Asia, the interest rate decision of the Bank of Japan (BoJ) was the focus of the markets this week.

The Bank of Japan (BoJ) kept the policy rate constant at 1.25 percent, in line with expectations. The policy rate remains the highest level since 1995. The bank took the interest rate decision with a vote of 8 to 1. BOJ member Hajime Takata cast his vote for an interest rate increase.

The bank announced that price increases were generally consistent with the target for the first time since it adopted the 2 percent inflation target in 2013. On the other hand, in Japan, Tokyo CPI for October increased above expectations with 2.8 percent. The data in question strengthened the interest rate increase expectations for the bank.

With these developments, on a weekly basis, the Nikkei 225 index in Japan gained 0.95 percent, the Kospi index in South Korea gained 3.25 percent, the Hang Seng index in Hong Kong gained 0.87 percent, while the Shanghai composite index in China lost 2.48 percent.

China's manufacturing industry PMI will be followed on Monday, and China's service sector PMI will be followed on Wednesday.

Domestic inflation data will be monitored

The BIST 100 index at Borsa Istanbul, which is predominantly sales-oriented domestically, closed at 10,759.56 points, with a decrease of 3.22 percent on a weekly basis.

Dollar/TL also completed the week at 49.9363, 0.5 percent above the previous weekly closing.

On the other hand, as of Friday, interim payments of 29.3 billion lira began to be made to 235 thousand 705 investors in 7 funds subject to extraordinary liquidation.

October inflation data will be followed next week on Tuesday. The median expectation of 16 institutions participating in the Bloomberg HT survey is that inflation will increase slightly, reaching 2.42 percent monthly and 29.59 percent annually. In September, inflation was 1.84 percent monthly and 29.73 percent annually.