August 2, 2024 was a dark day for stock markets around the world. The sharp declines that began in the Japanese stock market painted the indices in red in many countries, including Turkey.
Concerns that economic activity in the US may slow down more sharply than expected and the flow of news that the Bank of Japan (BOJ) may raise interest rates further, coupled with increasing geopolitical tension in the Middle East and lower-than-expected nonfarm payroll growth in the US, have led to sharp declines in many countries' stock markets.
The first sharp decline of the day came from Japan. While the Nikkei 225 index in Japan closed the day with a 5.81 percent decrease, the Kospi index in South Korea fell 3.80 percent, the Hang Seng index in Hong Kong fell 2.30 percent and the Shanghai composite index in China fell 0.8 percent.
In Europe, the benchmark index Stoxx Europe 600 closed the day with a 2.73 percent loss in value, while the DAX 40 index in Germany fell 2.33 percent, the CAC 40 index in France fell 1.61 percent, the FTSE 100 index in the UK fell 1.31 percent and the FTSE MIB 30 index in Italy fell 2.55 percent.
HARD DECLINE IN THE USA TOO
As recession concerns increase in the US, the daily decline in stock markets was 1.51 percent in the Dow Jones index, 1.84 percent in the S&P 500 index and 2.45 percent in the Nasdaq index.
Although the US Federal Reserve (Fed) gave the green light on Wednesday to interest rate cuts starting in September, data released in the country increased concerns that the economy could slow down more sharply than expected, which was effective in the negative trend in stock markets.
Nonfarm payroll growth in the US remained below expectations at 114,000 in July. The unemployment rate in the country rose from 4.1 percent to 4.3 percent in the same period. The unemployment rate, which has increased for 4 consecutive months, reached its highest level since October 2021 during this period.
Following the data, all calculations regarding interest rate expectations changed, and the probability that the Fed will cut the policy rate by 50 basis points in September has increased to over 70 percent, according to pricing in money markets.
The 10-year US Treasury yield fell to 3.79%, its lowest level since December 2023, as recession fears supported demand for safe-haven assets.
EVALUATIONS FROM FED OFFICIALS
Following the employment data, the first assessments came from Fed officials. Chicago Fed President Austan Goolsbee emphasized that the Fed would not overreact to a single piece of data and stated that there would be a lot of data to come before the bank's next meeting. Goolsbee stated that the unemployment rate rising above 4.1 percent was a situation that the Fed needed to respond to.
Richmond Fed President Thomas Barkin also noted that one more employment report would be released before he had to make a decision on how to respond with monetary policy.
On the corporate side, while investors are also focused on the financial results of companies, the revenues of US technology giants Apple and Amazon, which announced their balance sheets after the markets closed yesterday, increased in the April-June period, while Intel's revenue decreased.
Intel shares fell 26.1 percent after the company announced a decline in revenue and layoffs, while Amazon shares fell 8.8 percent after revenue missed expectations.
Apple shares rose 0.7 percent after revenue beat estimates and iPhone sales fell slightly but topped expectations.
LOSS IN BORSA ISTANBUL EXCEEDS 3 PERCENT
BIST 100 index in Borsa Istanbul closed the day at 10,473.47 points, losing 3.01 percent.
The banking index lost 3.95 percent and the holding index lost 3.14 percent. While all sector indexes declined, the communication sector lost the most on the day Instagram was closed by an arbitrary decision, with 4.44 percent.
Analysts noted that from a technical perspective, 10,450 and 10,400 points are support and 10,700 points are resistance in the BIST 100 index.
WHAT DO EXPERTS SAY?
İş Yatırım International Markets Director Şant Manukyan Şant Manukyan evaluated the developments in the stock markets yesterday for Sozcu.com.tr.
Noting that the first decline started in Japan yesterday and news that the BOJ could raise interest rates further caused a sharp decline in the indices, Manukyan stated that foreign investors' portfolio adjustments started in the Asian session.
Manukyan stated that recession concerns were added to this, non-farm employment data also increased recession fears, and that markets saw this as a search for a theme, and that when news that Iran could retaliate against Israel was added in the next 72 hours, investors' desire to enter the weekend with a position in the stock market decreased, and these developments were effective in the decline.
Manukyan said that there were harsh sales yesterday, but the real pricing could become clear at the beginning of the week.
Info Investment Strategist Çağlar Toros said, “The impact of geopolitical tensions also hit BIST 100.”
Stating that the pressure on the index, which started with balance sheet expectations, continued with geopolitical tensions, Toros said, “The perception that weekend risks were not taken also increased panic sales in the market.”
Stating that the rise in the fear index abroad also affected the sales in Borsa Istanbul, Toros said, “There is a meeting on inflation data and inflation report in the country next week. If tensions ease and inflation developments turn positive, there may be reactionary purchases.”