Tensions in the Middle East rose again with mutual attacks by the parties in the war between the USA, Israel and Iran. The increasing intensity of the conflicts has weakened expectations that a diplomatic compromise could be reached in the near future.
Tensions in the region, which remained relatively calm after the April 8 ceasefire, escalated again with mutual attacks by Israel and Iran. Israel said it had retaliated against some targets in Iran following the Tehran government's ballistic missile attacks.
While there has been no concrete attack news regarding direct military intervention from the US front, it has been observed that the conflicts are mainly concentrated between Israel and Iran.
With this tension, oil prices began to rise. While the barrel price of Brent oil rose to $96 on the first trading day of the week, it is currently at $95.2, up 3.4 percent.
Although the rise in oil prices is expected to increase current inflationary pressures and considering that the US economy maintains its strong outlook, the possibilities regarding possible restrictive monetary policy moves by the US Federal Reserve (Fed) in pricing money markets over the next year are expected to be spread out.
Markets currently have no expectation of the Fed cutting interest rates until the end of next year.
Analysts said investors today are trying to make decisions amid many negative circumstances, such as tensions in the Middle East, rising oil prices and inflationary pressures forcing central banks to raise interest rates, noting that inflation data to be announced in the US this week is being closely watched.
The gold ounce is at its lowest level in almost 2.5 months
Amid Fed rate hike forecasts and inflation concerns triggered by rising oil prices, the US 10-year bond rate rose 5 basis points to 4.58 percent, reaching its highest level in 20 days. The dollar index, which rose due to a shift in the Fed's forecasts to the “hawkish” side and tensions in the Middle East, exceeded 100 on Friday for the first time since April 7.
The downward trend in the gold ounce price, whose alternative costs increased with the stronger dollar and rising bond interest rates, continued into the new week. An ounce of gold fell to $4,300 in the new trading day, falling to its lowest level since March 23. An ounce of gold is currently being purchased for $4,310, down 0.4 percent.
With these developments, index futures contracts in the USA started the week negatively.
Index futures contracts remain negative in Europe
The renewed threat of conflict in the Middle East represents an important risk factor that could increase pressure on European economies with high dependence on energy imports.
Against the backdrop of ongoing global inflation concerns, the European Central Bank's (ECB) monetary policy decisions on Thursday will be followed with great attention. It is certain that the bank will increase interest rates by 25 basis points in 3 base rates at this meeting.
On the other hand, while the increase in geopolitical risks in the Middle East led to declines in technology stocks, the decline in precious metals led to selling in mining company stocks.
Meanwhile, the European Union (EU) said the ceasefire agreement between Israel and Lebanon was an important opportunity to achieve lasting peace and security and called on the parties to “fully respect the provisions of the agreement.”
Index futures contracts in Europe started the week negatively.
The stock markets in Japan and South Korea are under selling pressure
The selling trend on Friday on the New York Stock Exchange was also reflected on the Asian side in the new trading week. While a negative trend can be observed on the Asian stock markets, increasing risks in the Middle East are emerging as the main reason for the selling pressure in the regional markets.
South Korean and Japanese stock markets saw sharp declines as investors questioned artificial intelligence and technology companies.
On the other hand, although the Japanese economy grew above expectations at 1.8 percent in the first quarter of the year, this rate remained below the preliminary estimate of 2.1 percent.
Analysts reported that the Japanese economy lost momentum in the first quarter of the year due to the impact of weak investment spending.
Strong forecasts that the Bank of Japan (BoJ) will raise interest rates at its meeting this month also added selling pressure to the Japanese stock market. It is certain that the BoJ will raise interest rates by 25 basis points next week.
With these developments, the Kospi index in South Korea fell by 6.2 percent, the Nikkei 225 index in Japan fell by 4.1 percent, the Hang Seng index in Hong Kong fell by 1.4 percent and the Shanghai Composite Index in China fell by 1.3 percent.
Borsa Istanbul's BIST 100 index, which followed a sell-oriented trend on Friday, lost 1.28 percent of its value and ended the day at 13,694.19 points.
The June futures contract based on the BIST 30 index of the Borsa Istanbul Futures and Options Market (VIOP) fell 0.77 percent in the Friday evening session compared to the normal close of the session.
While the Dollar/TL exchange rate stood at 46.0520 on Friday, today it is trading at 46.1010 at the opening of the interbank market, 0.1 percent above the previous close.
Domestically, the interest rate decision of the Central Bank of the Republic of Türkiye (CBRT) and the messages to be conveyed in the policy text will be the market focus this week.
Analysts said that real effective exchange rate data is being tracked in the country today while the data agenda abroad is quiet, noting that 13,600 and 13,500 points in the BIST 100 index technically represent support and 13,800 and 13,900 points represent resistance.
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