Global markets are responding positively after the US economy grew by 3% in the second quarter, suggesting the Federal Reserve may end its inflation fight with a "soft landing" without harming the economy.
Despite ongoing concerns about whether the fight against inflation will lead to recession, recent macroeconomic data has helped alleviate worries. Investors are now focused on the core personal consumption expenditures price index, a key inflation indicator for the Fed.
In addition to the growth figures, the core personal consumption expenditures price index rose by 2.5%, while excluding food and energy, the index increased by 2.8%. The number of initial unemployment claims fell to 218,000, below market expectations, indicating a resilient labor market.
Fed officials continue to influence market sentiment, with Governor Lisa Cook expressing strong support for a recent 50 basis point rate cut. Expectations for further cuts remain strong, with an 88% probability of a 75 basis point cut by year-end.
In corporate news, Micron Technology's stock surged 14.7% after exceeding revenue expectations, reflecting strong demand for AI-related chips. Meanwhile, the Bank of Mexico cut its policy rate by 25 basis points to 10.50%.
Currently, the US 10-year Treasury yield stands at 3.80%, while the dollar index stabilizes at 100.8. Gold prices are down slightly from their recent high of $2,685.61, trading at $2,664, and silver has also seen a minor decrease.
In Europe, the European Central Bank (ECB) faces uncertainties regarding its easing process as economic slowdown signals persist. ECB President Christine Lagarde highlighted potential risks from new technologies like AI, while member Isabel Schnabel noted signs of economic slowdown in the Eurozone.
The Swiss National Bank (SNB) also cut its policy rate by 25 basis points to 1%. European indices saw gains, with Germany's DAX reaching a record high.
In Asia, the People's Bank of China (PBoC) announced a 50 basis point cut in reserve requirements, expected to release around 140 billion USD into the market. This move aims to support economic growth amid a reported 17.8% decline in industrial profits.
In Japan, the Tokyo Consumer Price Index rose by 2.2% year-on-year, while the dollar/yen exchange rate saw a slight increase, trading at 146.0. The Nikkei 225 index rose by 1.9% as markets reacted to the economic data.
In Turkey, the BIST 100 index closed down 0.62% at 9,829.19, with the dollar/TL exchange rate opening slightly higher at 34.1770.