Global Markets Decline Due to Fed and Geopolitical Risks
Global financial markets followed a negative trend due to expectations of a year-end interest rate hike by the US Federal Reserve and rising geopolitical tensions in the Middle East.
Global markets lost value under the influence of expectations that the US Federal Reserve (Fed) could implement a new interest rate hike by the end of the year and geopolitical risks in the Middle East.
Geopolitical Risks and Oil Prices
Developments in the Middle East and news reports indicating that the White House asked the Pentagon to develop strike options against Iranian targets increased concerns in the markets. With the decrease in ship traffic in the Strait of Hormuz, the barrel price of Brent crude rose up to $102.
Fed Policies and Bond Yields
While the FOMC meeting minutes published by the Fed indicated that an additional interest rate hike is probable by the end of the year, this probability was priced in at 94 percent for the December meeting. As a result of these developments, the US 10-year Treasury yield hit its highest level since April 2002 at 5.36 percent.
Stock Indices and Local Markets
While the S&P 500, Nasdaq, and Dow Jones indices declined on the New York Stock Exchange, a selling trend was also recorded in European and Asian markets. On Borsa Istanbul, the BIST 100 index lost 2.03 percent of its value, completing the day at 12,122.94 points.