This week, major U.S. stock indexes gained (S&P +3.6%, DOWJ +2.7%, Nasdaq +4.1%), after 3 weeks of losses. Following the Labor Day weekend, stocks lost Monday, due to concern over rate hikes, inflation, and growth. The only gaining sectors were healthcare, real estate, and utilities, the popular recession stocks due to the pricing power of these industries.
But the market rallied the rest of the week, the S&P gaining 1.8%, 0.7%, and 1.5%, shrugging these concerns off.(Except for the energy sector.) Over the last few weeks, the investors overreacted to the Jackson Hole speech, the market became oversold. Even though the market gained back some of that lost ground, this rally isn't likely to be long-lasting.
In Europe, the markets were under pressure from rate hikes and a looming energy crisis but added 1.06% overall. Monday, the market fell when Russia cut the Nord Stream, but the market rebounded Tuesday. On Thursday, the ECB raised rates by 0.75%. The European currencies were also under pressure from the dollar, the pound falling to an all-time low.
The energy sector lost amid concerns over Chinese demand due to the country's zero COVID policy. Brent retreated to around $88, its lowest level since the war in Ukraine started. OPEC+ agreed to cut production for the first time in a while. In Europe, natural prices jumped Monday after the Nord Stream cut, retreating the rest of the week.
In Turkey, the BIST extended its winning streak, gaining 10% over the week. The Index was led by bank stocks. The Turkish banks are announcing record profits this year due to loose Turkish monetary policy. The inflation numbers were announced this week, 80.2%. With the Central Bank's policy rate only at 13%, the real rate is at an all-time low of 67%. So, the investors are dumping their funds into foreign currency, commodities, and stocks, causing the market rally. But this strategy of growth is not sustainable according to most economists.
Sources: The Wall Street Journal, Dunya Gazetesi
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