Anasayfa Blog Market Analysis Weekly Market Analysis / 16 - 20 January 2023

Weekly Market Analysis / 16 - 20 January 2023

by Halim Engin Özaydın
Weekly Market Analysis /  16 - 20 January 2023

The rise in gold prices continues unabated.

While positive data from the USA affected gold positively, gram gold reached its highest levels in history. The movement in ounce gold prices started to change the balances in the markets. Ounce gold, which started to move towards 2000 dollars, also created momentum on the TL gram gold side. Along with the ounce gold traded at the peak of 9 months, gram gold also climbed to 1165 liras. Ounce gold prices rose to the level of 1929 dollars. The main reason for the strengthening of gold is the expectation that the inflation trend in the USA will decrease and the Fed's rate of increase in interest rates will slow down and interest rate cuts will be made in 2023.

World Bank revised down its economic growth forecasts.

Last week, the World Bank revised its global growth forecast for 2023 from 3% to 1.7%. In its Global Economic Prospects report, the World Bank revised its growth expectations for the world economy for 2023 and 2024 downwards and announced it as 1.7% and 2.7%, respectively. The organization pointed high inflation, declining investments and tight monetary policy practices as the reason for the revision.

CPI in the US decreased by 0.1% on a monthly basis in December.

While consumer prices in the USA decreased by 0.1% on a monthly basis in December, the improvement in inflation supported the expectations that the Fed will reduce the rate of interest rate hikes. Consumer prices in the US fell 0.1% on monthly basis in December for the first time since May 2020. While the annual CPI inflation in the country fell to 6.5%, the lowest in more than a year, the decline in energy prices played an important role in this development. The view that the Fed will raise interest rates by 25 basis points at its meeting, which will end on February 1, gains importance.

The current account deficit was 3.7 billion USD in November.

According to the data announced by the CBRT, the current account deficit was 3.7 billion USD in November. In this period, the foreign trade deficit remained at high levels, while the 12-month cumulative current account deficit reached 45 billion USD, its highest level since August 2018.

The market's inflation expectations declined.

According to the results of the CBRT's Market Participants Survey for January, the market's inflation expectation for the next 12 months decreased from 34.9% to 30.4%. While the growth and current account deficit expectations of market participants for the end of 2023 remained flat, the year-end USD/TL forecast was realized as 23.12.

BIST-100 index decreased by 6.7% last week.

Data on the easing of inflationary pressures in the US and statements made by Fed officials supported the global risk appetite. While the global stock markets followed a positive course, gold prices rose above the 1,900 USD level for the first time since May. The barrel price of Brent crude oil also increased by 8.5% last week to 85.3 USD. Domestically, the BIST-100 index recorded its fastest decline since December 2021 with 6.7% on a weekly basis. Turkey's 5-year CDS premium continued to increase with bond interest rates.

CBRT's first interest rate decision of the year will be followed.

The first Monetary Policy Committee meeting of the Central Bank of the Republic of Turkey (CBRT) will be held on Thursday, January 19th. To be recalled, the CBRT announced that, in an environment where risks regarding global growth increased and economic activity decelerated, it was announced that the acceleration in industrial production and employment, as well as the continuity of structural gains in supply and investment capacity, ended the interest rate cut cycle that it started in August with a 150 basis point rate cut at its November meeting. Parallel to this guidance, the CBRT, which did not make any changes in interest rates at its December meeting, is not expected to make any changes in interest rates at its January meeting.