While the world economy and markets have left the worst first half of the last 50 years behind, they have not been able to start the second half with hope.
Because while everyone is struggling with rising inflation, interest rates are lifted from their all-time lows and plentiful, cheap money is withdrawn. Profits will decline and global growth will halve this year as companies and markets prepare for a more expensive and scarce liquidity environment.
Furthermore, a recession in major economies such as Europe and the United States this winter or next year has become a strong possibility.
➔ While there is no new data or development exacerbating this predicted situation, global markets suffered a fundamental shock and sell-off yesterday. It is almost as if the sales we cannot base on a concrete justification. “Tuesday swing” he was true to his word.
➔ Such movements usually occurred on Mondays. We attributed it to the two-day weekend, the accumulation of events, the change of position with calculations and the Monday syndrome.
PRICES OF THE WAREHOUSE?
➔ This time the first day of the week passes normally and the markets are shaking on Tuesday, which can be attributed to the fact that the US is a public holiday due to liberation day. In other words, the effect of the first day of the week can be said to have shifted from Monday to Tuesday.
➔ By the way, Monday Japanese Nomura in the coming year The United States and Australia, the Eurozone, South Korea, the United Kingdom, Japan and Canada enter recession waiting announced.
Nomura commented that the factor leading to the recession is that “central banks want to restore their credibility by sacrificing growth to control inflation and continuing their tightening policy.”
➔ Yesterday, Citibank predicted oil prices could drop to $ 65 this year and $ 45 next year due to the recession.
SINGLE INCREASE DOLLAR
➔ The glass that filled drop by drop eventually overflowed, almost all asset prices fell on the day heavy selling and breaking occurred due to fears of a recession.
➔ In any case, on the day the determination to return to liquidity emerged, the only asset standing was the dollar. Measure the value of the dollar against major currencies The dollar index rose 1.6%. It reached the level of 106,580.
The euro fell from 1.0421 to 1.0235 against the dollar, which reached its highest value in 20 years since October 2002. The daily loss of the euro was 1.8%.
➔ The dollar gained 2.4 percent in one day against developing country currencies. JP Morgan’s developing country exchange rate fell to its lowest level since 2010 with a value of 49,828.
➔ Even gold did not resist the rise in the dollar. On a day when the need for asylum has increased, strong sales of safe haven gold have come. Gold fell from $ 1,809 to $ 1,764 an ounce, depreciating 2.5 percent in one day.
DECREASE OF 10% IN OIL
➔ When the fear of recession and the pressure to switch to liquidity were strong, so did the oil sales. In fact, the biggest decrease on a daily basis was in Brent oil prices with 9.5%. The price of oil fell to $ 103.
➔ Along with oil, the most sensitive commodity to production is copper. Significant drops in the past few weeks Copper prices fell another 5 percent yesterday to $ 7,599. Compared to its peak on April 5, copper fell by 27%.
➔ Wheat prices also took their share from yesterday’s strong sales. The price of wheat, which fell 4.8 percent in one day, fell to $ 8.04 ($ 295 per ton) on a bushel scale, very close to the pre-Ukrainian war.. The drop in the price of wheat, which peaked at $ 14.25 ($ 524 a ton) on March 7, reached 44 percent.
➔ Reflecting the average of the goods in total The CRB index fell 4.7% yesterday. Compared to its peak a month ago, the index has fallen by 15%.
➔ The decline in world equity markets, on the other hand, reached 2.2 percent for a while, but lost 0.5 percent at the end of the day.
DO THE WAVES CONTINUE?
➔ There is no concrete reason for the shaking of the markets, an event that changes dynamics overnight, or no economic data announced.
➔ Anyway such large and widespread sales are not made by grabbing moisture from the air.
➔ The main reason seems to be the fear of the recession. There is a high probability that there will be a surge in sales caused by the combination of various fears and worries.
➔ Close the gap between short-term bond rates and long-term bond rates, even turning the yield curve into sweat, a strong wave of oil and copper sales, has significantly increased the likelihood of a recession in the world.
➔ If this is the case, more difficult conditions and more waves await the world economy and financial markets starting in the autumn.