5 Fundamental Factors to Consider at Market Open

5 Key Factors to Consider at Market Opening

The current state of the U.S. economy continues to show strong resilience despite the protectionist trade policies implemented during the Trump administration. The recently announced ISM manufacturing PMI data rising to 52.6 in January has been a supportive sign for expansion in the industrial sector. The ISM services PMI data to be released today is also expected to present a similar positive picture.

Macro Data and Fed Policies

The resilience in these macro data has strengthened a cautious approach by the U.S. Federal Reserve (Fed) towards interest rate cuts. Markets are lifting particularly short- and medium-term bond yields with expectations that policy interest rates will remain elevated for an extended period. The U.S. 10-year Treasury yield is currently trading at around 4.28%.

Inflation and Bond Supply

On the inflation front, the process of returning to the target appears to be slowing down. The rigidity in service inflation and fluctuations in energy prices are continuing to pose risks to price stability. Particularly, the increasing bond supply from the Treasury may raise upward pressure on yields.

Global Data Flow and Geopolitical Developments

Globally, the partial government shutdown in the U.S. has led to the postponement of the official employment report for January, increasing market sensitivity to the ADP private sector employment data. In this context, an increase of 45,000 in ADP employment is expected. Additionally, U.S.-Iran nuclear talks and Russia-Ukraine contacts are noteworthy developments in the geopolitical sphere.

Domestic Developments

Domestic inflation data is forming the main agenda in the markets. According to TÜİK data, the Consumer Price Index (CPI) rose by 4.84% month-on-month in January, while annual inflation fell to 30.65%. This indicates that the direction of the disinflation process is still ongoing. The statements of the CBRT president and the interest rate cuts by the Monetary Policy Committee reflect the Central Bank's cautious stance.

Borsa Istanbul and Stocks

In Borsa Istanbul, a buying trend is observed despite inflation data coming in above expectations. The BIST 100 index has reached record levels by rising above 13,900. While the banking index has shown a more limited performance, interest from domestic and foreign investors continues.

As a result, key elements to consider at market opening include macroeconomic data, Fed policies, and geopolitical developments. These dynamics provide a critical roadmap for investors.