What Markets Will Follow After The Fed Surprise

What Markets Will Follow After The Fed Surprise

Global markets are trying to overcome the shock caused by the Federal Reserve's (Fed) cut interest rate with a "surprise" timing. The Fed lowered its policy interest rate by 50 basis points yesterday evening before the Open Market Committee (FOMC) meeting on March 17-18, as concerns over the economic effects of the new type of coronavirus (Covid-19) epidemic dropped to 1-1.25 percent. The Fed stated that the foundations of the US economy continue to remain strong, and interest rates were lowered to support employment and price stability targets despite the risks. "We came to the conclusion that the risks to the US economic outlook have changed dramatically. In response, we went to relax in the monetary policy stance to further support the economy," Fed President Jerome Powell said after the decision. The Fed's decision to make interest rates outside its planned meetings for the first time since the 2008 global crisis had a shocking effect on the markets. Following the Fed's decision, the US 10-year bond interest rates fell below 1 percent for the first time in its history, while the dollar index reached its lowest level of about 2 months with 96.98. Dow Jones index fell 2.94 percent, S&P 500 index fell 2.81 percent and the Nasdaq index fell 2.99 percent. Analysts pointed out that the Fed's move supported financial markets and increased concerns regarding the Covid-19 outbreak and its effects on the economy, and pointed out that the ounce price of gold gained 3.2 percent with the dollar's depreciation and investor demands in search of a safe-haven. Stating that other central banks after the Fed are also expected to take supportive steps, analysts said that markets could become more sensitive to the news flow regarding the Covid-19 outbreak after the first shock was overcome. Data to be followed in the markets today: 10.00 Germany, retail sales in January 11.55 Germany, February service sector PMI 12.00 Eurozone, February service sector PMI 12.30 UK, February service sector PMI 13.00 Eurozone, retail sales in January 14:30 Turkey, the real effective exchange rate in February 16.15 USA, February ADP private-sector employment 17.45 USA, February service sector PMI 18.00 USA, February ISM non-manufacturing index