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

Developments Following a Busy Week

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

Fed Continues to Cut 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 reassured investors by stating that further rate cuts in December were not guaranteed. As a result, the yield on 10-year Treasury bonds in the U.S. increased by about 10 basis points to 4.1%.

Strong Growth in the Eurozone

The Eurozone demonstrated a stronger-than-expected performance in GDP figures, thanks especially to the increase in exports. This positive outlook prevented the European Central Bank from feeling the need to change interest rates.

Price Movements in Copper and Precious Metals

Copper prices in London reached approximately $11,000 per metric ton for three-month deliveries. Global supply concerns, combined with production declines seen at major mining operations, increased expectations for copper demand. On the other hand, gold prices decreased weekly, continuing to hover around $4,000; however, the value has risen by over 50% since January 1.

Uncertainties in the Oil Market

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

Stock Market Rise

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

What Will the Future Bring?

In the coming week, inflation and PMI data within the country will be closely monitored. October inflation is expected to be around 2.82%. Additionally, important company earnings reports will be released in the U.S.; firms like Palantir, AMD, McDonald's, and Airbnb will be on the market's radar.