The Fed's Balance Sheet Reduction Process Has Come to an End: What Should Investors Do?

Developments After a Busy Week

After a busy week for international investors, the high-level meetings between Xi Jinping and Donald Trump, company earnings reports, and central bank meetings stood out. However, despite these developments, the movements of the stock indices remained limited. Wall Street closed the week positively, especially with the rise of significant technology stocks, while European stock exchanges experienced a slight decline.

Fed Continues to Cut Interest Rates

In line with expectations, the Fed reduced interest rates by 25 basis points and announced that the balance sheet reduction process would end on December 1. Jerome Powell alleviated investors somewhat by stating that further interest rate cuts in December were not certain. As a result, the yield on 10-year U.S. Treasury bonds rose by about 10 basis points to around 4.1%.

Strong Growth in the Eurozone

The Eurozone demonstrated a stronger-than-expected performance in GDP figures, particularly due to an increase in exports. This positive outlook allowed the European Central Bank to refrain from changing interest rates.

Price Movements in Copper and Precious Metals

In London, copper prices surged to approximately $11,000 per metric ton for three-month delivery. Concerns about global supply, combined with production declines seen in major mining producers, increased demand expectations for copper. On the other hand, gold prices fell weekly, continuing to hover around $4,000; however, the value increase since January 1 has been over 50%.

Uncertainties in the Oil Market

The trade talks between the U.S. and China brought anticipated reductions in tariffs. However, uncertainties regarding U.S. sanctions and China's continued purchasing of Russian oil created a skeptical atmosphere regarding the effects on oil prices. With a small increase in oil production set by OPEC+ for December, Brent crude oil prices rose by 0.73% to reach $65.24 per barrel.

Rise in the Stock Market

October proved to be a harbinger of a positive trend for the stock markets. The U.S. marked its sixth consecutive month of gains, while Europe recorded its fourth consecutive month of gains. Investors made a net investment of $10.58 billion in global equity funds in the past week, influenced by the expected interest rate cuts from the Fed and trade agreements.

What Lies Ahead?

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