Strong Rise in Markets Despite Geopolitical Risks

New Year, Renewed Portfolio Preferences

As investors review their portfolio preferences with the beginning of the new year, geopolitical tensions and announced macroeconomic data continue to play a decisive role in asset pricing. Last week, the U.S. military intervention in Venezuela and the ousting of President Nicolas Maduro became a significant focal point in the markets.

Shift Towards Technology and Artificial Intelligence Companies

While tensions in the region have not fully affected risk appetite in global markets, interest in technology and artificial intelligence companies' stocks continues. Expectations that artificial intelligence companies will maintain their investments and increase their earnings have been among the determining factors in the rising risk appetite in the markets.

U.S. Employment Data

In macroeconomic data reports, it was observed that in the U.S., non-farm employment increased by only 50,000 people in December last year, falling short of expectations. The unemployment rate decreased from 4.5% to 4.4%, indicating a gradual cooling in the labor market. However, the low unemployment rate somewhat alleviated investors' concerns and strengthened expectations that the Federal Reserve (Fed) would keep its policy interest rate steady this month.

Interest in Defense Stocks Abroad

Statements from U.S. President Donald Trump are being closely monitored by investors, as Trump expressed a desire for the 2027 defense budget to reach $1.5 trillion. He emphasized that this budget would play a critical role in strengthening America and ensuring a secure future. Additionally, Trump pointed out the increasing presence of Russia and China in Greenland, stating, "We need Greenland for our national security."

Market Reactions

The New York Stock Exchange showed an upward trend last week. On a weekly basis, the S&P 500 gained 1.57%, the Nasdaq gained 1.88%, and the Dow Jones gained 2.32%, with the S&P 500 index reaching a record high. Meanwhile, the yield on the U.S. 10-year Treasury bond decreased to 4.17%. Last week, due to geopolitical tensions and central bank purchases, the prices of gold and silver also increased, with the price of gold per ounce rising by 4.1% to $4,510.

Status of European and Asian Markets

European stock markets followed a buyer-friendly path led by defense stocks, while an increase in purchases was observed in Asian markets, excluding Hong Kong. The Shanghai Composite Index in China increased by 3.82%, the Kospi in South Korea by 6.42%, and the Nikkei 225 in Japan by 3.18%. However, the Hang Seng index in Hong Kong closed down by 0.41%.