What's Happening in the Markets? Critical Days Are Starting!

What’s Happening in the Markets? Critical Days Ahead!

Last week, global markets experienced a period of intense data and news flow. The meeting between U.S. President Donald Trump and Chinese President Xi Jinping raised hopes that tensions in geopolitical and economic relations might decrease, paving the way for a new phase in trade processes.

The White House announced that China would temporarily lift its export restrictions on rare earth elements and end investigations into U.S. semiconductor manufacturers. These developments signal a potential easing in long-standing trade tensions. However, China's continued purchases of Russian oil and the U.S.'s silence on the matter have created a cautious atmosphere in energy prices.

Economic Data and Interest Rate Expectations

With the U.S. government closed, the release of critical data such as employment has been delayed, while third-quarter earnings reports generally came in positively. Strong earnings reports from tech giants contributed to the Wall Street indices closing in positive territory.

The Fed lowered interest rates by 25 basis points last week. However, Chair Powell's indication that a new cut in December is not certain has affected short-term rate cut expectations. The yield on 10-year U.S. Treasury bonds rose to 4.1%, marking an increase of about 10 basis points.

The Euro/Dollar exchange rate fell below the 1.1540 support level, weakening its outlook, while it was observed that currencies are attempting to find balance around the 1.15 level. The 1.16 and 1.1650 levels are emerging as new resistance points.

Precious Metals and Energy Prices

In recent weeks, gold has retreated to around $3,900 following a record high of $4,382 due to profit-taking. The Fed's cautious remarks have limited short-term buying reactions, and it is expected that gold prices will stabilize this week in the range of $3,880–$4,050. Gold has gained 50% in value since the beginning of the year, continuing to find support from rising demand by central banks and ETF purchases.

Oil prices rose as OPEC+ conveyed that "production increases will remain limited," with Brent crude rising to $65.20 and U.S. crude to $61.40. October has shown a positive performance for global markets, marking the sixth consecutive month of gains for U.S. indices and the fourth for European indices.

Domestic Developments and Inflation Data

Domestically, the inflation data for October has been a topic of keen interest for investors. In September, monthly inflation came in at 3.2%, exceeding expectations. The Central Bank of the Republic of Turkey highlights that the increase in food prices is related to agricultural supply shortages and drought, emphasizing the impact of service sector components on inflation.

Investors expect the October inflation data to be around 2.8%, which would lower annual rates to 33.2%. This could influence the Central Bank's decision not to cut rates in its December meeting.

The BIST 100 index closed Friday up 1.2% at 10,971 points. The index is currently trapped in the 10,800-11,000 band, and if it surpasses the 11,000 level, an ongoing upward trend is expected.