The expectation that diplomatic contacts at the leadership level within the scope of the 81st UN General Assembly held in New York could reduce geopolitical risks fed the risk appetite in the stock markets. While US and Iranian negotiators' evaluation of a gradual agreement was the focus of investors, Chinese President Xi Jinping's visit to the US and the constructive messages given there also reduced the stress in the markets.
US President Donald Trump, who hosted Chinese President Xi at the White House, said, "We have made great progress that is extremely positive for both countries." he said. The Chinese President stated that the two countries "agreed on a new trade arrangement." In addition, the Busan agreement, which is a trade ceasefire between the two countries that was to expire in November, was extended until January 10.
On the other hand, data indicating that economic activity in the USA continues to warm up has strengthened concerns that inflationary pressures may intensify in the country and therefore the US Federal Reserve (Fed) may continue its hawkish steps.
Analysts stated that the strong economic activity accompanied by high oil prices may cause the Fed to adopt a more hawkish stance in monetary policy, and noted that the probability of the bank increasing the policy rate by 25 basis points next month has increased to 70 percent in the pricing in money markets.
In addition, oil prices, which moved depending on geopolitical developments, deeply affected the bond markets by feeding inflation risks throughout the week. US 10-year bond interest has reached its highest level since 2007, and 30-year bond interest has reached its highest level since 2004.
Clearer signals regarding the course of inflation and the state of economic activity will be sought in the growth, non-agricultural employment and personal consumption expenditures (PCE) price index data to be announced next week in the USA.
On the other hand, optimism towards artificial intelligence also supported the positive course in the markets. Microsoft, one of the US technology companies, has introduced new features in its Copilot application, including a coding tool and a constantly active artificial intelligence agent. Akamai Technologies also announced a multi-year agreement worth $11.6 billion with artificial intelligence company Anthropic.
With these developments, the US 10-year bond yield rose to 5.23 percent during the week and finished the week at 5.17 percent, after testing the highest level of the last 19 years. The US 30-year bond yield also rose to 5.53 percent, reaching its highest level since 2004.
The dollar strengthened against other currencies due to expectations that interest rates will remain high. The dollar index closed the week at 100.9 with an increase of 0.7 percent.
The ounce price of gold, whose alternative cost increased with the appreciation of the dollar and the rise in bond interest rates, completed the week at 4 thousand 285 dollars with a depreciation of 2.1 percent. The barrel price of November delivery Brent oil was traded at $104.5 with an increase of 0.6 percent.
New York stock market followed a positive trend
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 1.21 percent, the Nasdaq index increased by 2.06 percent and the Dow Jones index increased by 0.28 percent.
On the macroeconomic data side, the current account deficit in the USA increased by 15.7 percent in the second quarter of the year, reaching 246 billion dollars.
The Purchasing Managers Index (PMI) of the manufacturing industry in the country reached the highest level of 52 months with a value of 57 in September and was above market expectations. In the same period, the service sector PMI also saw its highest value in 59 months with 58.7.
The number of people applying for unemployment benefits for the first time in the USA decreased to 197 thousand in the week ending September 19, below market expectations.
Next week, Dallas Fed manufacturing activity index on Monday, Conference Board consumer confidence index on Tuesday, ADP employment report, PCE price index, growth on Wednesday, weekly unemployment benefit applications on Thursday, S&P Global and ISM manufacturing industry PMI, non-agricultural employment, unemployment rate, manufacturing industry new orders, durable goods orders data on Friday will be followed.
ECB President Lagarde's messages are a matter of curiosity in Europe
Despite the risks regarding energy supply in Europe, optimism about technology stocks supported the risk appetite in the regional markets. However, inflation fears fueled by energy costs and tightening expectations for central banks have increased.
Next week, inflation data across the region, as well as the speeches of European Central Bank (ECB) President Christine Lagarde at the European Parliament Economic and Monetary Affairs Committee session and the ECB Legal Conference, will be closely followed.
On the other hand, the news flow that the USA may restrict diesel exports has become an additional risk factor for European economies, which are already experiencing a tightness in energy supply.
In macroeconomic data, private sector activities in the Eurozone accelerated in September, while the composite Purchasing Managers Index (PMI) reached the highest level of the last 41 months with 53.1.
Analysts stated that the data in question increased concerns that inflationary pressures may continue in the region, and said that market expectations were shaped that the ECB could raise interest rates once before the end of the year.
While geopolitical developments in the region are closely followed, it was reported that an unmanned aerial vehicle (UAV) attack was carried out in the industrial zone in the Perm region of Russia, where Permnefteorgsintez, one of the country's largest oil refineries, is located. In addition, the Novoshahtinsk Oil Refinery, which was damaged in an unmanned aerial vehicle (UAV) attack in the Rostov region of the country, temporarily stopped its operations.
Meanwhile, the European Union (EU) Council approved the transfer of approximately 3 billion euros to the country within the scope of the Ukraine Fund. In the written statement made by the EU Council, it was stated that it was decided to make the 8th regular payment within the scope of the Ukraine Fund, which was established to support the reconstruction and reforms of Ukraine.
With these developments, the FTSE 100 index in the UK increased by 0.34 percent, the DAX index in Germany increased by 0.36 percent, the CAC 40 index in France increased by 0.16 percent and the MIB 30 index in Italy increased by 0.62 percent on a weekly basis.
In the week that will start on September 27, ECB President Lagarde's speech will be presented on Monday, economic confidence index, real sector confidence index, consumer confidence index in the Eurozone on Tuesday, growth in the UK, inflation, unemployment rate in Germany on Wednesday, ECB President Lagarde's speech, unemployment rate, manufacturing industry PMI in the Eurozone on Thursday, and inflation data in the Eurozone on Friday.
Markets remained shallow in Asia
In a week when transaction volume decreased due to holidays in Asia, Chinese President Xi's visit to the USA and his meetings with President Trump determined the direction of the regional markets.
While the constructive messages of the two leaders and the extension of the trade ceasefire to January 10 were welcomed, the lack of significant progress on critical issues such as rare earth elements caused the risks in this area to continue.
In addition to these developments, the dollar/yen parity increased by 0.3 percent on a weekly basis to 157.8, despite the expectations that the Japanese economic management might intervene in the country's currency, the yen.
According to the data announced this week, the manufacturing industry PMI in Japan in September was 54.1, the service sector PMI was 51.6 and the composite PMI was 52.5, while all three data decreased compared to the previous month.
With these developments, the Kospi index in South Korea increased by 2.71 percent and the Nikkei 225 index in Japan increased by 2.07 percent on a weekly basis, while the Hang Seng index in Hong Kong decreased by 0.97 percent and the Shanghai composite index in China decreased by 0.60 percent.
Industrial profits data will be followed in China on Monday, industrial production and retail sales in Japan, manufacturing industry and service sector PMI data in China on Wednesday, Tokyo CPI and unemployment rate data in Japan on Friday.
Message from President Erdoğan regarding fund investigations
The BIST 100 index at Borsa Istanbul, which followed a sales-oriented trend domestically, closed at 12,899.35 points, with a decrease of 2.90 percent on a weekly basis.
While the developments regarding the fund investigations were being followed, President Recep Tayyip Erdoğan said, "Our judiciary launched a comprehensive investigation, there were detentions and arrests. Whoever is responsible will be held accountable before the law." he said.
On the other hand, President Erdoğan addressed the participants at the 81st General Assembly discussions at the UN General Assembly Hall. Expressing their belief that freedom of navigation should be protected in the Strait of Hormuz, Erdogan said, "We wish that the current issues in the Aegean and Eastern Mediterranean will be resolved on the basis of good neighborly relations and in accordance with international law." he said.
Emphasizing that Türkiye continues to be an island of stability amid conflicts with its developing defense industry and shock-resistant economy, Erdoğan said, "As an integral part of Europe, our country plays important roles in ensuring the prosperity and security of the continent." he said.
On the other hand, Fatih Karahan, Governor of the Central Bank of the Republic of Turkey (CBRT), made a presentation titled "Inflation and Macroeconomic Outlook" within the scope of the 19th Turkey Investment Conference organized by DEİK Turkey-US Business Council (TAİK) in New York. Karahan said, "When evaluated as a whole, the data indicate that the disinflation process continues despite more challenging supply conditions." he said.
Dollar/TL also completed the week at 48.9540, 0.4 percent above the previous weekly closing.
Next week, domestic economic confidence index on Tuesday, unemployment rate, foreign trade balance on Wednesday and manufacturing industry PMI data on Thursday will be followed.
