OPINION
Market Rating Before FOMC MeetingJan 31
Stock Markets are falling amid rising Covid-19 cases in Shanghai
Stress level is high in the financial markets. In order to take the high inflation under control, the US Federal Reserve noted that it will be more aggressive compared to the previous guidance, leading to rise in stress levels. In addition, coronavirus cases continue to rise in China, the second largest economy of the world.
In the last 24 hours, 2 680 cases showing signs of Covid-19 and 17 581 cases showing no signs of Covid-19 have been reported on the Chinese mainland, the Chinese National Health Commission (NHC) said in a statement. In addition, most of these cases were identified in Shanghai, the largest city in the country. Number of critical cases was 160 on Saturday and reached 196 on April 24, Sunday. Deaths were registered as 51, setting a record. 39 deaths had been reported in the city the previous day.
The gradual shutdown announced on March 28 in Shanghai, the country's financial center, for an indefinite period to control cases triggered by the Omicron variant, has reached its 4th week, while the Chinese government has also implemented restrictions in some parts of Beijing.
Due to the shutdown in Shanghai, the largest city of China which alone has more than 27 percent of the world's manufacturing industry, supply chain outages became the case. The port of Shanghai, one of the most important commercial centers in Asia, was the main determinant of disruptions in the supply of food, medicine and necessities, especially automotive, semiconductors and electronic goods.
Expectations that the Shanghai port closure will make a strong contribution to supply bottlenecks, which are the most important element of the international inflationary climate, especially towards the exit from the pandemic, as well as that global economic activity will become difficult to recover, become apparent in the new week in asset pricing. As a result of the bottleneck in the production channel, spot crude oil prices in international markets with a decrease in energy demand have retreated to around 97.00 USD, a 2-week low, while US 10-year treasuries are trading around 2.90, the highest level of the last 3.5 years.
On the other hand, VIX index, which is considered an indicator of investor sentiment in the markets, reached a 1.5-month high by 30 points and sales accelerated in the stock markets.. The decline in the Shanghai Composite index (SSEC), China's benchmark stock exchange, exceeded 5 percent. with 2 928 points, sales at SSEC, which saw the lowest level since June 2020, jumped to the US and European stock markets. SP500 index fell to 4,224 points, erasing the gains of 40 days, while Germany's DAX40 lost close to 2 percent to 13 856, its lowest level since March 15.
In the last 24 hours, 2 680 cases showing signs of Covid-19 and 17 581 cases showing no signs of Covid-19 have been reported on the Chinese mainland, the Chinese National Health Commission (NHC) said in a statement. In addition, most of these cases were identified in Shanghai, the largest city in the country. Number of critical cases was 160 on Saturday and reached 196 on April 24, Sunday. Deaths were registered as 51, setting a record. 39 deaths had been reported in the city the previous day.
The gradual shutdown announced on March 28 in Shanghai, the country's financial center, for an indefinite period to control cases triggered by the Omicron variant, has reached its 4th week, while the Chinese government has also implemented restrictions in some parts of Beijing.
Due to the shutdown in Shanghai, the largest city of China which alone has more than 27 percent of the world's manufacturing industry, supply chain outages became the case. The port of Shanghai, one of the most important commercial centers in Asia, was the main determinant of disruptions in the supply of food, medicine and necessities, especially automotive, semiconductors and electronic goods.
Expectations that the Shanghai port closure will make a strong contribution to supply bottlenecks, which are the most important element of the international inflationary climate, especially towards the exit from the pandemic, as well as that global economic activity will become difficult to recover, become apparent in the new week in asset pricing. As a result of the bottleneck in the production channel, spot crude oil prices in international markets with a decrease in energy demand have retreated to around 97.00 USD, a 2-week low, while US 10-year treasuries are trading around 2.90, the highest level of the last 3.5 years.
On the other hand, VIX index, which is considered an indicator of investor sentiment in the markets, reached a 1.5-month high by 30 points and sales accelerated in the stock markets.. The decline in the Shanghai Composite index (SSEC), China's benchmark stock exchange, exceeded 5 percent. with 2 928 points, sales at SSEC, which saw the lowest level since June 2020, jumped to the US and European stock markets. SP500 index fell to 4,224 points, erasing the gains of 40 days, while Germany's DAX40 lost close to 2 percent to 13 856, its lowest level since March 15.
