Rate Hike Expectations and Geopolitical Tensions Pressure Global Markets
The Fed's potential rate hike and military developments in the Middle East created selling pressure in global markets while pushing oil prices higher.
Statements by Fed Chair Kevin Warsh and rising geopolitical tensions caused selling pressure in global markets, while the probability of a rate hike in September rose to 60 percent.
Fed's Monetary Policy Signals
Speaking at the Jackson Hole Economic Policy Symposium, Fed Chair Kevin Warsh stated that additional steps in monetary policy may be needed if inflation fails to decline to the targeted level.
Noting that labor markets are consistent with full employment but that figures regarding the price stability target are concerning, Warsh emphasized that the Fed's primary focus must be prices.
Rate Hike Probability and Market Impact
Following Warsh's messages of determination in the fight against inflation, money market pricing showed that the probability of the Fed raising interest rates in September rose to 60 percent.
Geopolitical Tension in the Middle East
The U.S. military's attack on Iran's Lark Island increased selling pressure in global markets, while concerns that oil supplies would be disrupted also affected the markets.
Rise in Brent Oil Prices
As a result of geopolitical developments and supply concerns, the barrel price of December Brent crude increased by 5.6 percent to reach $90.95.
Outlook for International Stock Exchanges
While the New York stock exchange ended Friday in negative territory, European exchanges rose with strong corporate earnings, and Germany's DAX 40 index reached a record level.
Asian stock exchanges followed a negative course as China's manufacturing PMI data remained below the 50 level, pointing to contraction.
Domestic Markets and Growth Expectations
Domestically, investors turned their attention to growth data, while the BIST 100 index on Borsa İstanbul managed to finish the day with gains.