Geopolitical crisis puts global markets under pressure

As the week begins, markets are moving under the shadow of airstrikes conducted by the US and Israel against Iran, and Iran's retaliatory attacks on Western bases in the region and Israel. The possibility of a prolonged war in the Middle East due to the ongoing conflicts has increased investors' risk perception and negatively affected global economic forecasts.

United States President Donald Trump, in his latest assessment following the attacks, emphasized that the military chain of command in Iran has been largely eliminated and that operations will continue until objectives are met. Trump stated that the attacks could continue for four weeks, but that this period could also be shortened. Pointing to the leadership change in Iran, Trump said, "They want to talk, and I have accepted that, so I will talk to them. They should have done this sooner." The Iranian side, meanwhile, rejected claims of renewed negotiations with the US, stating that they would not take a step back.

Iran's move to close the Strait of Hormuz has created a risk of disruption in global oil trade, leading to sharp rises in commodity prices. Brent crude oil tested its highest level in a year on the first day of the week at 77.6 dollars per barrel. During the same period, investors turned to gold and bonds; the ounce price of gold reached 5,393 dollars, setting a new record. Significant declines were seen in the yields of American bonds.

Analysts believe that central banks may find their hands tied in the current uncertain environment. The rise in oil prices and the danger of a slowdown in trade are expected to potentially cause inflation to deviate from expectations.

SHARP VOLATILITY IN GLOBAL MARKET INDICES

In Europe, where stock markets closed mixed last week, a negative trend dominated index futures at the start of the new week. The European Union stated that tensions in the region must be reduced through diplomacy. EU High Representative for Foreign Affairs Kaja Kallas stated that the EU will support diplomatic efforts and continue its work with the goal of preventing Iran from obtaining nuclear weapons. European Commission President Ursula von der Leyen described Iran's retaliation against Bahrain as "unjustified and unacceptable." Council of Europe Secretary General Alain Berset warned that the Middle East is being dragged into a full-scale conflict.

In Asian markets, declines were observed in almost all indices except for the Chinese stock market due to the impact of the Iranian attack. The Nikkei 225 index in Japan fell by 1.6 percent, and the Hang Seng index in Hong Kong fell by 1.7 percent. In energy-importing countries such as South Korea and India, currencies lost value against the dollar. In contrast, the stock market in China gained value with the momentum of political meetings. While the manufacturing sector in Japan exceeding expectations was welcomed, rising energy costs could put pressure on the Bank of Japan's (BoJ) interest rate decisions.

In American markets, the economic data agenda is being followed as closely as geopolitical developments. While the rise in the US Producer Price Index gave signals that inflation in the country is resilient, it caused interest rate cut expectations to be pushed to July. Non-farm payroll data to be announced this week also holds clues about the Fed's next steps.

DOMESTIC SHORT-SELLING BAN FROM THE CMB

In Borsa Istanbul, the BIST 100 index, which closed with a loss on Friday, closed at 13,717.81 points with a 1.16 percent decline. The Capital Markets Board (CMB) suspended short-selling transactions for one week. Additionally, Borsa Istanbul announced that it has reduced the transaction ratio in the Equity Market from 5:1 to 3:1. Minister of Treasury and Finance Mehmet Şimşek stated that geopolitical events are being closely monitored, saying, "We are evaluating the possible effects on our economy in all its dimensions; our economy has strong macroeconomic foundations and is resilient against shocks."

While the Dollar/TL finished the week at the 43.9340 level, the new week started with a slight rise. Expectations regarding the fourth-quarter growth data to be announced domestically today suggest that the Turkish economy grew by 3.6 percent in the last quarter of 2025. Markets will also carefully watch the statements of European Central Bank President Christine Lagarde and foreign PMI data.

Among the prominent economic data of the day are Turkey's growth and manufacturing PMI figures, as well as manufacturing indices coming from the UK, Germany, the US, and the Eurozone.