Expectations that the parties in the Middle East could return to the negotiating table, combined with easing concerns over energy supplies, strengthened the positive mood in global markets. The decline in oil prices also eased pressure on bond yields.
October-dated Brent crude fell 2.6% to $86.3 per barrel. The yield on the U.S. 10-year Treasury note remained flat at 4.65%, while the dollar index rose 0.1% to 98.9. Gold fell 0.4% to $4,641 per ounce.
U.S. data and Nvidia earnings awaited
While concerns over inflation continued in the United States, expectations that the Federal Reserve could deliver another interest-rate hike by the end of the year remained in place. Markets focused on growth and personal consumption expenditures data, as well as the core personal consumption expenditures price index, which is closely watched for signs of price pressures.
A slowdown in the core personal consumption expenditures price index could alter expectations for the Fed’s monetary policy and increase volatility in the markets.
Chipmaker Nvidia’s earnings, which the company is expected to announce, were also among the issues watched by investors. The company’s shares gained 2.2% after seven consecutive sessions of losses. The earnings report is important for determining whether the artificial intelligence-driven rally will continue.
The S&P 500 rose 0.32%, the Nasdaq gained 0.66% and the Dow Jones advanced 0.30%. U.S. stock-index futures began the day on a mixed note.
Canada to announce retaliatory tariffs on U.S. products
The Canadian government announced that it would impose retaliatory tariffs on approximately $20 billion worth of U.S. products in response to the 50% tariffs imposed by the United States on many Canadian goods. The tariffs, which will take effect on September 8, will be set at rates of 15%, 25% or 50%.
Canada’s Department of Finance said the counter-tariffs would focus on steel, dairy products, household appliances, agricultural equipment, paper and electronics. The rate on steel and aluminum products, furniture and clothing, which had previously been subject to a 25% counter-tariff, will be raised to 50%.
Household appliances, dairy products such as cheese, fish and seafood, and certain steel and aluminum derivative products will be among the goods subject to a 25% tariff.
German data influence the direction of European stocks
Major European indexes, except those in France, posted gains. Expectations that energy costs could fall and macroeconomic data from Germany influenced pricing in regional markets.
The German economy grew 0.3% in the second quarter from the previous quarter and 1% year on year. The Business Climate Confidence Index published by the Munich-based Economic Research Institute rose to 88.8 points in August, extending its gains for a fourth consecutive month.
The FTSE 100 in the United Kingdom rose 0.29%, Italy’s FTSE MIB 30 gained 0.34% and Germany’s DAX 40 advanced 0.61%. France’s CAC 40 fell 0.16%.
Losses in shares of French luxury fashion and accessories companies stood out. Rising living costs in Europe, the impact of U.S.-Iran tensions on tourism in the region and slowing demand increased pressure on luxury-goods stocks.
Semiconductor stocks recover in Asia
Risk appetite in U.S. and European markets spread to Asia. Technology and semiconductor stocks rose ahead of Nvidia’s earnings report.
In South Korea, SK Hynix shares rose 2.5%, Samsung Electronics shares gained 2.9% and Hanmi Semicon shares advanced 1.2%. Shares of SMIC, China’s largest semiconductor manufacturer, also rose 4.8%.
Near the close, the Nikkei 225 was up 0.8%, the Shanghai Composite Index gained 0.6%, the Kospi rose 1.8% and the Hang Seng advanced 0.6%.
Türkiye’s CDS spread falls to 217 basis points
The BIST 100 index on Borsa Istanbul ended the day down 0.19% at 14,473.42 points. The August contract based on the BIST 30 index on VIOP rose 0.24% in the evening session compared with the regular-session close.
Türkiye’s five-year credit default swap spread fell to 217 basis points amid expectations that geopolitical risks in the Middle East could ease and the impact of domestic liquidity-management measures. This was the lowest level recorded since February 18.
The dollar/Turkish lira exchange rate closed the previous day at 48.0920. The rate rose 0.1% to trade at 48.1170 at the opening of the interbank market.
The domestic data agenda is expected to remain quiet. Abroad, U.S. personal consumption expenditures and growth data will be monitored. For the BIST 100 index, 14,400 and 14,300 points stand out as support levels, while 14,600 and 14,700 points are resistance levels.
Data to watch
- Weekly mortgage applications in the United States
- July personal income in the United States
- July personal spending in the United States
- July personal consumption expenditures price index in the United States
- July durable-goods orders in the United States
- Annualized second-quarter GDP data in the United States
