Despite the decrease in demand caused by the new type of coronavirus (Covid-19) epidemic, oil prices continue to decline sharply due to the insufficient production cuts and increases in storage and transportation costs.
After futures contracts based on West Texas Intermediate (WTI) type crude oil, which expired yesterday in the USA, fell to minus level, the most active contract fell to the 10 dollar limit as the announced crude oil and gasoline stocks exceeded the forecasts. The barrel price of Brent oil accelerated its decline with these developments, falling to 16 dollars with a 15 percent loss of value in Asian markets today.
While the sharp decline in oil prices negatively affects all markets through the shares and funds of energy giant companies, concerns that excessive value losses may threaten the supply chain in almost all sectors also negatively affect the expectations regarding global economic activity.
Analysts point out that despite this abnormality in market pricing, the news flow regarding the Covid-19 epidemic is relatively positive. Analysts stated that the slowdown in the rate of increase in the number of cases and vaccine trials increased hopes that the worst of the epidemic could be left behind this month, and said that the news flow on the subject would be decisive on the direction of the markets.
While there was a sell-off trend in the stock markets in the USA yesterday, the dollar index continued its upward trend and settled above the 100 level. While the Dow Jones index lost 2.67 percent, the S&P 500 index 3.07 percent and the Nasdaq index 3.48 percent yesterday, it is seen that the indices recorded a limited increase in futures today.
On the European side, the stock markets fell sharply as the ZEW indices announced in Germany yesterday fell below expectations, causing concerns that the contraction in economic activity may exceed forecasts and the shock of the drop in oil prices. DAX index in Germany lost 3.99 percent, FTSE 100 index in England lost 2.96 percent and CAC 40 index in France lost 3.77 percent.
While oil prices continue their downward trend in Asian markets today, a negative trend is observed in the stock markets, except for China. Near the close, the Nikkei 225 index in Japan lost 1.2 percent, the Kospi index in South Korea lost 0.2 percent, and the Shanghai composite index in China rose 0.2 percent.
BIST 100 index, which declined domestically in parallel with the decreasing global risk appetite, completed the day at 97,619 points with a decrease of 1.34 percent. Dollar/TL, which closed at 6.9810 yesterday after reaching the 7 limit, is traded at 6.9850 at the opening of the interbank market today.
Analysts stated that the course of oil prices and the news flow regarding the Covid-19 epidemic remain at the center of the agenda, and stated that the interest rate decision from the CBRT’s Monetary Policy Committee (MPC) meeting will be followed domestically.
Analysts stated that from a technical perspective, the 97,000 and 96,400 levels in the BIST 100 index are important support positions in the short term, and the 7 level in dollar/TL stands out as resistance.
While the majority of economists participating in the survey conducted by AA Finance predicted that the CBRT would continue to reduce interest rates, the median of the policy rate reduction expectations was 50 basis points. Economists’ cut expectations ranged from 25 to 100 basis points.
At the MPC meeting on March 17, the policy rate was reduced by 100 basis points to 9.75 percent.
The data to follow in the markets today are as follows:
10.00 Türkiye, April consumer confidence index
14.00 Türkiye, CBRT interest rate decision
17.00 Eurozone, April consumer confidence index
Source: https://www.aa.com.tr/tr/ekonomi/yurt-ici-piyasalar-tcmbnin-faiz-kararina-odaklandi/1813838
