Daily Analysis 05/01/2023

While the service sector PMI figure in the Euro Zone was announced at 49.8 in December, above the expectations, the index continued to improve at 49.2 in Germany, the region's largest economy. The data released pointed out that the recession in the Euro Zone may not be as deep as feared. In the US, the ISM manufacturing index continued to contract for the second month in a row, falling to 48.4. The fact that the number of JOLTS job vacancies in the country remained below expectations showed that the labor market conditions remained tight. Fed officials warned in the minutes that unnecessary easing in financial conditions would undermine efforts to achieve price stability.

British Prime Minister Altar announced that they will grow the economy and create better-paying jobs, while saying that they will cut inflation in half this year to reduce the cost of living. In the USA, the ISM manufacturing PMI was announced at 48.4, slightly below the expectations, in December, indicating a contraction below the 50 threshold value. JOLTS vacancies fell to 10.5 million in November, below market expectations. In the minutes of the Fed's December meeting, it was reported that Fed officials agreed that there would be no rate cut in 2023, while further rate hikes were necessary. There were upward movements in the pair yesterday.

In global markets, concerns about recession suppress risk appetite. From time to time, it leads to sales in the stock markets. Last night, the minutes of the Fed meeting held in December were published. There were signals in the minutes that interest rate hikes would continue until inflation was lowered. ADP private sector employment change in the USA today and non-farm employment data will be followed tomorrow. It is thought that the data to be announced from the USA may affect the expectations for the January 31-February 01 Fed meeting. This morning the dollar index is trading between 103.98-104.32.

The S&P 500 index closed yesterday at 3.853 with an increase of 0.02%. The minutes of the Fed meeting were released yesterday. The minutes are not fresh data, they are important to see the details of the two-day meeting in December. In the minutes, the signal was given that the Fed would continue to raise interest rates until it lowers inflation. Markets strengthened the expectation that the Fed would continue to increase interest rates for a while. Yesterday's minutes were interpreted hawkishly, but the US stock markets managed to close the day with rising. US futures are trading lightly this morning. There are data to be released from the USA today. Data-based movements can be seen.