Pre-Market Analysis: Notable Developments Today

Pre-Market Analysis: Notable Developments Today

In global equity markets, cautious optimism prevails. U.S. indices are trading in a stable range as investors adopt an observer position while awaiting the Federal Reserve (Fed) decision. The noticeable weakness in employment in recent days has led to a decline in the dollar index and an increase in expectations for a loosening of 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 occupy the top ranks of market agenda. President Trump's description of Europe as a union led by weak leaders and his emphasis on the need for elections regarding Ukraine are heightening global geopolitical risks. Trump's statements indicating support for various political figures in Europe are being closely monitored for their impact on transatlantic relations.

Employment Data and Commodity Markets

In the economic sphere, Trump's comments suggesting he will highlight candidates who are "warm to quickly cutting rates" in the new Fed chair election strengthen expectations of a departure from a hawkish tone. JOLTS job openings in the U.S. were recorded at 7.6 million, while the ADP employment data came in at 4,750 jobs. This situation continues to present a weak outlook in the employment market.

On the commodity side, gold has shown a rebound 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 pushing gold into a short-term upward trend.

The Impact of the Fed Decision on Markets

The Fed decisions, to be announced at 22:00 today, along with Powell's statements, will be a significant determinant in the markets. The market's weighted expectation is for a 25 basis point cut, lowering the policy rate to the 3.50%–3.75% range. This situation may cause temporary sharp pricing in the markets.

Current Status of Turkish Markets

A noticeable recovery trend has been observed in Borsa Istanbul in recent days. The BIST 100 index has traded above 11,200 points for the first time in 70 days, due to anticipated interest rate cuts from both the Fed and the Central Bank of the Republic of Turkey (CBRT). The index exceeding the 11,160 level indicates not only the completion of the peak formation but also the breaking of the medium-term downward channel to the upside.

Another development attracting investors' attention is the banking index. With strengthened expectations for interest rate cuts, a decrease in borrowing costs is anticipated. The index's settling above the 16,500 level could support the move towards previous peaks.

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