Global markets swayed by hawkish Fed and Nvidia's results; data eyed

Global financial markets are increasingly concentrating on macroeconomic indicators following a slight de-escalation of geopolitical tensions in the Middle East. The week's financial landscape was significantly shaped by two major factors: statements from US Federal Reserve officials and the earnings report from chip giant Nvidia.

Fed Chair Kevin Warsh's remarks at the Jackson Hole Symposium reinforced the central bank's commitment to its 2% inflation target, signaling that financial conditions were not yet sufficiently tight. This hawkish tone significantly increased the probability of a 25 basis point interest rate hike by the Fed in September, rising from 35% to 60%. This expectation, coupled with PCE inflation figures exceeding market forecasts, further bolstered the hawkish outlook.

In response to the Fed's signals, US Treasury yields climbed, with the 2-year rate reaching 4.35%, and the dollar index rose to 99.7. The price of gold fell to $4,455 per ounce due to increased opportunity costs, while Brent crude oil dropped to $88.3 per barrel amid expectations of potential openings in the Strait of Hormuz.

Nvidia's stellar performance, reporting a record quarterly revenue of $9.2 billion, significantly boosted US stock markets, with the S&P 500, Nasdaq, and Dow Jones all closing the week positively. Looking ahead, investors are keenly awaiting the non-farm payroll data release next week.

European markets experienced a mixed week, with gains in the UK and Germany contrasted by declines in France and Italy. Minutes from the European Central Bank (ECB) and statements from its officials indicated that further interest rate hikes remain on the table if inflation does not subside. Germany's industrial export expectations reached their highest level since February 2022, and its second-quarter growth exceeded expectations at 1%. The Eurozone's upcoming inflation data will be a key focus for the region's markets.

Asian markets closed the week with a mixed performance, despite Nvidia's results boosting risk appetite. Tokyo's Consumer Price Index (CPI) accelerated to 1.9%, signaling rising inflationary pressures. However, plans by Alibaba to sell shares worth $10.2 billion for AI investments and Samsung's announcement of substantial capital returns to shareholders put pressure on technology stocks. The region will be closely monitoring PMI data in the coming week.

In Turkey, the BIST 100 index on Borsa Istanbul rose 0.87% to close at 14,641.56 points. The Central Bank of the Republic of Turkey's decision to resume 1-week repo auctions supported buying interest. Turkey's 5-year credit default swap (CDS) premium fell to its lowest level since February, reaching 217 basis points, while the dollar/TL closed the week at 48.2380. Critical data for economic activity, including second-quarter growth forecasts (expected at 2.80% year-on-year) and August inflation figures, will be closely watched domestically next week.