Pre-Market Analysis: Notable Developments Today

Pre-Market Analysis: Notable Developments Today

In global equity markets, a cautious optimism prevails. U.S. indices are trading in a stable range as investors adopt a wait-and-see approach ahead of the Federal Reserve (Fed) decision. The recent noticeable weakness in employment has led to a depreciation of the dollar index and an increase in expectations for easing interest rates. This situation may bring about upward attempts in currency pairs and an increase in volatility post-Fed.

U.S. Political Developments and Their Effects

Political rhetoric in the U.S. continues to be a top priority on the market agenda. President Trump's characterization of Europe as a union led by weak leaders and his emphasis on the need for elections regarding Ukraine are increasing global geopolitical risks. Trump's statements about supporting various political figures in Europe are being closely monitored regarding transatlantic relations.

Employment Data and Commodity Markets

In the economic sector, Trump’s comments that he will highlight names who are "open to rapidly cutting rates" in the new Fed presidency elections are strengthening the market's expectations to move away from a hawkish tone. While the JOLTS job openings in the U.S. were recorded at 7.6 million, the ADP employment data came in at 4,750 individuals. This situation continues to present a weak outlook for the employment market.

On the commodity side, gold has shown a recovery towards the $4,200 level after a decline in the early days of the week. The adoption of a moderate tone by Fed members and potential interest rate cuts are bringing gold into a short-term upward trend.

Impact of Fed's Decision on Markets

The Fed decisions and Powell’s statements, which will be announced at 22:00, will be a significant determinant in the markets. The majority expectation among investors is that the policy rate will be lowered by 25 basis points to a band of 3.50%–3.75%. This situation may lead to short-lived severe price adjustments in the markets.

Current Situation in Turkey's Markets

Recently, a notable recovery trend has been observed in Borsa Istanbul. The BIST 100 index has traded above 11,200 points for the first time in 70 days, influenced by expected interest rate cuts from both the Fed and the Central Bank of the Republic of Turkey (CBRT). The index's break above the 11,160 level indicates both the end of the peak formation and the breakout of the medium-term downtrend channel to the upside.

Another development attracting investors' attention is the banking index. With strengthening expectations for interest rate cuts, a decrease in borrowing costs is anticipated. The index may support a move towards previous peaks as it settles above the 16,500 level.

On the currency front, the Turkish Lira (TL) occasionally shows weaker performance compared to emerging market currencies. However, upward movements in the exchange rate are being kept under control.