The Fed's Balance Sheet Reduction Process Has Ended: What Should Investors Do?

Developments Following a Busy Week

After a hectic week for foreign investors, the high-profile meetings between Xi Jinping and Donald Trump, corporate earnings reports, and central bank meetings stood out. However, despite these developments, the movements of the stock indices remained limited. While Wall Street closed the week positively, thanks to the increase in important technology stocks, European exchanges experienced a slight decline.

Fed Continues Interest Rate Cuts

In line with expectations, the Fed lowered interest rates by 25 basis points and announced that the balance sheet reduction would end on December 1st. Jerome Powell eased investors' concerns by stating that further interest rate cuts in December were not certain. As a result, the yield on 10-year U.S. Treasuries rose by approximately 10 basis points to 4.1%.

Strong Growth in the Euro Area

The Euro Area demonstrated stronger-than-expected GDP figures, particularly due to an increase in exports. This positive outlook has led the European Central Bank to refrain from changing interest rates.

Price Movements in Copper and Precious Metals

Copper prices in London surged to around $11,000 per metric ton for three-month delivery. Global supply concerns, combined with production declines seen in major mining producers, have increased demand expectations for copper. On the other hand, gold prices dropped weekly, continuing to hover around $4,000; however, since January 1st, there has been an over 50% increase in value.

Uncertainties in the Oil Market

Trade discussions between the U.S. and China brought expected tariff reductions. However, uncertainties regarding U.S. sanctions and China's continued purchases of Russian oil created a skeptical atmosphere regarding the effects on oil prices. With a slight increase in oil production set by OPEC+ for December, Brent crude oil prices reached $65.24 per barrel, up 0.73%.

Stock Market Surge

October heralded a positive trend for the stock markets. The U.S. completed its sixth consecutive month of gains, while Europe experienced its fourth month of profits. Investors made a net investment of $10.58 billion into global equity funds last week, influenced by the expected interest rate cuts from the Fed and trade agreements.

What Does the Future Hold?

In the upcoming week, domestic inflation and PMI data will be closely monitored. October inflation is expected to come in around the %2.82 level. Additionally, significant corporate earnings reports will be released in the U.S.; companies like Palantir, AMD, McDonald's, and Airbnb are on the market's radar.