Turkish Central Bank Cuts Interest Rate to 47.5%
On December 26th local time, the Turkish Central Bank announced a reduction of the benchmark interest rate from 50% to 47.5%, a decrease of 250 basis points, exceeding market expectations. This is Turkey’s first rate cut since 2022, marking a significant shift in the country’s monetary policy.
According to a statement from the Turkish Central Bank's Monetary Policy Committee, inflation was stable in November, and core inflation showed a downward trend in December. Despite weak domestic demand, improvements in service and unprocessed food prices have positively contributed to the slowing of inflation. The central bank stated that it will continue to implement tight monetary policy until inflation trends show a significant and sustained decline, aiming for a 5% mid-term target.
Since 2022, Turkey's inflation rate has soared to a 24-year high of 85%. To address high inflation, the Turkish Central Bank raised the benchmark interest rate from 8.5% to 50% gradually starting in 2023, maintaining it for the past nine months. This rate cut reflects an adjustment in policy direction, drawing attention to future economic trends.
US Stocks Open Low, Awaiting "Santa Rally"
On December 26th, the three major US stock indexes opened with slight declines. As of 22:33 Beijing time, the Dow Jones fell by 0.23%, the S&P 500 dropped by 0.26%, and the Nasdaq decreased by 0.27%. In commodities, international gold and oil prices rose during the session.
With the end of the Christmas holiday, trading activity is expected to remain light, but investors hold a positive outlook on year-end stock market performance. Historical data since 1950 shows that the US stock market's average gain in the last five trading days of the year and the first two days of the new year is 1.3%, hence the term "Santa Rally".
Analysts point out that major tech stocks continue to be the driving force behind market rebounds, occupying a significant position in institutional investors' portfolios. It is widely expected that upcoming buying will continue to focus on the tech sector.
Mixed Performance in US Employment Data
According to the latest data from the US Department of Labor, for the week ending December 21st, the number of initial unemployment claims slightly decreased to 219,000, but continued claims rose to 1.91 million. This indicates that while the job market remains resilient, some unemployed individuals are facing greater challenges in re-employment.
Honda and Nissan Begin Merger Talks
Regarding individual stocks, Honda Motor (HMC.US) saw its stock price rise by 3.17% to $28.115 per share. Earlier reports said Honda and Nissan signed a memorandum of understanding, planning to complete a merger by 2026, creating a new holding company that will become the world's third-largest car manufacturer. This news has sparked widespread market attention.
Turkey's rate cut, US employment data, and year-end stock market performance have become the three major focal points of the year-end market. Against the backdrop of light global trading, all sides are focused on the economic outlook and market performance for 2024.
