While global share markets were mixed this week due to developments in the Middle East, expectations regarding the monetary policy of the US Federal Reserve (Fed) and predictions about the profitability of technology companies, the inflation data to be announced next week, especially in the US and around the world, became the focus of investors.
While expectations regarding the possible hawkish steps of the Fed were postponed to December due to signs of cooling in the labor markets in the USA, oil prices, which remained high due to geopolitical risks, continued to fuel inflation fears.
The conflicts in the Middle East have spread throughout the region and have reached a level that threatens the energy supply, which had an impact on the direction of asset prices. The slowdown in tanker traffic in the Strait of Hormuz also increased concerns about energy supply and highlighted predictions that rising energy costs could strengthen inflationary pressures.
While the news flow on Wednesday that the White House asked the Pentagon to develop attack options against Iranian targets that could be carried out before the midterm elections on November 3 increased the risk perception in the markets, on Friday, US President Donald Trump's statements to the contrary relieved the markets to some extent.
Trump also announced that they agreed with Russian President Vladimir Putin for Russia to supply over 300 thousand tons of diesel fuel to the US and global markets in the first stage, an additional 500 thousand tons during November and then 1 million tons.
While these developments create an expectation that energy costs, which have a significant impact on the acceleration of inflation in the USA, may decrease, all eyes are on the inflation data to be announced next week, especially in the USA and around the world, and the speeches of the heads of leading central banks within the scope of the 2026 annual meetings of the International Monetary Fund (IMF) and the World Bank Group.
Analysts stated that inflation data will shape the interest policies of central banks around the world, and noted that if the data are below expectations, the tightening process in monetary policies on a global scale may slow down. According to the pricing in the money markets, there is an 83 percent probability that the Fed will leave the policy rate unchanged at its meeting this month.
On the other hand, the minutes of the Federal Open Market Committee (FOMC) meeting held on September 15-16, published by the Fed this week, signaled an interest rate increase by the end of the year. Messages from bank officials also reinforced these expectations.
Speaking at the Istanbul Economic Forum, Fed Board Member Christopher Waller opened the door to an interest rate increase at the December meeting. "Rate increases do not need to be made in successive meetings, but they must be carried out within a reasonable period of time," Waller said. he said.
On the other hand, variable expectations about whether company profitability, especially in the field of artificial intelligence, will continue or not increase volatility in the markets. Question marks regarding the possibility of US-based artificial intelligence company OpenAI reaching its annual revenue targets overshadowed the growth expectations of technology companies and created selling pressure on stocks in the sector.
Analysts stated that the financial results of companies may have an impact on the direction of the markets in the balance sheet season, which will accelerate starting next week, and that predictions regarding profitability performance and growth expectations may be decisive in the positioning of investors.
With these developments and the US Treasury Department's $6 billion repurchase, the selling pressure in the bond markets eased somewhat this week. The US 10-year bond interest, which tested its highest level since 2002 at 5.36 percent on Wednesday, completed the week at 5.25 percent.
The dollar index continued to strengthen due to geopolitical uncertainties and the depreciation of the euro. The dollar index increased by 0.3 percent on a weekly basis to 102.2.
The ounce of gold, whose alternative cost decreased as expectations that the Fed might not raise interest rates this month grew stronger and bond interest rates retreated, ended its two-week decline. An ounce of gold increased by 1.3 percent to 4 thousand 194 dollars. The barrel price of December delivery Brent oil completed the week at 104.4 dollars with an increase of 2.12 percent.
New York stock market followed a positive course
Stock markets in the USA followed a positive course this week. On a weekly basis, the S&P 500 in the New York Stock Exchange increased by 1.15 percent, the Nasdaq index increased by 0.64 percent and the Dow Jones index increased by 0.93 percent. The New York stock exchange, which tested record levels during the week with strong profit expectations for company balance sheets, lost momentum towards the last trading days of the week.
On the macroeconomic data side, the consumer confidence index measured by the University of Michigan in the USA fell to 46.3 in October, below market expectations. Thus, consumer confidence fell to its lowest level since May.
The country's Institute of Supply Management (ISM) service sector Purchasing Managers Index (PMI) fell to 54.9 in September, falling below market expectations and indicating that the growth rate in the sector has slowed down.
Next week, second-hand home sales on Tuesday, inflation on Wednesday, Fed President Kevin Warsh's speech on Thursday, Producer Price Index (PPI), retail sales, weekly unemployment benefit applications, Philadelphia Fed manufacturing industry index, industrial production and capacity utilization data on Friday will be followed.
BoE Governor Bailey gave a message from Istanbul
European stock markets were negative this week, except for the UK, due to high oil prices due to geopolitical uncertainties and financial concerns about the French economy.
While the reassuring statements from French Finance Minister Roland Lescure reduced concerns about the country's economy, the rise in the country's 10-year bond interest rate was also curbed. France's 10-year bond yield finished the week flat at 4.85 percent.
The speech to be made by European Central Bank (ECB) President Christine Lagarde within the scope of the 2026 annual meetings of the IMF and the World Bank Group, which will be held in Thailand next week, will be closely followed.
On the other hand, Bank of England (BoE) Governor Andrew Bailey spoke at the Istanbul Economic Forum organized by the Central Bank of the Republic of Turkey (CBRT). Bailey stated that the global financial system maintains its resilience despite increasing uncertainties, but that we should not be complacent and added, "Therefore, we must be prepared for a world where larger shocks are not an exception." he said.
Stating that the war in the Middle East has created great uncertainty regarding growth, inflation and interest rates, Bailey noted that existing vulnerabilities in government bond markets, credit markets and asset valuations may be revealed.
Meanwhile, the European Union (EU) Commission announced that a new payment was made to Ukraine within the scope of the defense component of the 90 billion euro support loan to Ukraine. In the statement, it was stated that the financing of 1.24 billion euros covers drones, anti-drone systems, drone ammunition and missiles produced by Ukrainian organizations.
In addition to these developments, the United Nations Conference on Trade and Development (UNCTAD) warned that global economic growth will slow down to 2.6 percent this year and predicted a 4 percent growth in trade in goods and services. The organization predicted that the world economy will grow by 2.7 percent in 2027.
According to data released this week, the composite Purchasing Managers Index (PMI) in the Eurozone rose to 53.1 points in September, reaching the highest level in the last 41 months. Producer Price Index (PPI) in the Eurozone increased by 1.9 percent in August compared to the previous month.
Corporate bankruptcies in Germany continued their upward trend in July, reaching the highest monthly level in the last 13 years, despite signs of recovery in the economy.
With these developments, on a weekly basis, the FTSE 100 index in the UK increased by 0.86 percent, the DAX index in Germany decreased by 0.51 percent, the CAC 40 index in France decreased by 1.19 percent and the MIB 30 index in Italy decreased by 0.27 percent.
In the week that will start on October 12, inflation data in Germany will be covered on Tuesday, ECB President Lagarde's speech on Wednesday, industrial production in the Eurozone and industrial production in the UK on Thursday, and inflation data in the Eurozone on Friday.
First interest rate increase from the Reserve Bank of India since February 2023
On the Asian side, a mixed week was observed, with some stock exchanges closed due to holidays and transaction volume decreased. Concerns about energy supply and expectations about the monetary policies of central banks had an impact on the direction of the regional markets.
On the other hand, according to the data announced this week, the foreign trade balance in Japan had a surplus of 4.06 trillion yen (approximately 25.7 billion dollars) in August. Earnings of employees in the country increased by 3.8 percent in August, above expectations. Analysts stated that wage increases give an idea about the persistence of inflation in Japan and noted that the Bank of Japan (BoJ) may be effective in its policy steps in the coming period.
Meanwhile, the Reserve Bank of India increased interest rates for the first time since February 2023. The bank increased the policy rate by 25 basis points to 5.5 percent.
With these developments, the Hang Seng index in Hong Kong increased by 1 percent and the Nikkei 225 index in Japan increased by 1.06 percent on a weekly basis, while the Kospi index in South Korea decreased by 5.39 percent and the Shanghai composite index in China decreased by 0.74 percent.
Next week, PPI data will be followed in Japan on Tuesday, consumer and producer inflation in China on Wednesday, and industrial production and capacity utilization data in Japan on Thursday.
Markets in Japan will be closed on Monday for Sports Day.
The bill containing regulations regarding some investment funds that have been decided to be liquidated is in the Turkish Grand National Assembly.
Borsa Istanbul's BIST 100 index, which remained flat domestically, closed at 12,265.98 points, decreasing by 0.03 percent on a weekly basis.
While many important developments took place in the completed week, Minister of Treasury and Finance Mehmet Şimşek, in his speech at the "National Vision Summit in Economy and Finance", said, "17 funds open to the Turkish Electronic Fund Trading Platform (TEFAS) were liquidated. The money of 43 thousand fund participants was transferred to the relevant banks." he said.
On the other hand, the "Law Proposal on Certain Investment Funds That Have Been Decided to Liquidate", signed by AK Party deputies, was submitted to the Presidency of the Turkish Grand National Assembly. According to the proposal, the liquidation of the funds will be carried out by the institutions in charge of liquidation under the supervision and control of the Capital Markets Board (CMB).
In the funds determined by the Board, an interim payment of this amount can be made from the liquidation assets of the relevant fund for investors with a net investment amount of less than 1 million Turkish lira, and a maximum of 1 million Turkish lira can be made for investors with a net investment amount of 1 million Turkish lira and above.
On the other hand, the Istanbul Economic Forum, organized by the CBRT at the Istanbul Financial Center (IFM), brought together central bank governors and senior policy makers from all over the world, including Fed Board Member Christopher Waller and BoE Governor Andrew Bailey.
Speaking at the closing of the event, CBRT President Fatih Karahan stated that they will make the Istanbul Economic Forum an annual event and said, "The preparations for the next one will start immediately from now on. I hope it will be a meeting that you will look forward to every year, where you can reunite with your colleagues, meet new ones and continue these dialogues." he said.
Domestic balance of payments data will be followed next week. Economists participating in the AA Finance Expectation Survey predicted that the current account would have a surplus of 3 billion 502.9 million dollars in August.
Dollar/TL also completed the week at 49.2700, 0.3 percent above the previous weekly closing.
Next week, domestic balance of payments on Tuesday, budget balance on Thursday, CBRT market participants survey on Friday, housing sales, housing price index and international credit rating agency S&P Global Ratings' expected evaluation of Turkey will be followed.
