Statements suggesting that US-Iran tensions could escalate, along with risks around the Strait of Hormuz, increased concerns about energy supplies and global investment conditions. As risk appetite weakened, oil prices rose and investors moved away from risky assets.
A senior Iranian official said that if diplomatic efforts failed, the country could shift from a defense-focused policy to an attack-focused policy. US President Donald Trump also answered “No” when asked in the Oval Office whether the 60-day framework agreement, whose term had expired, would be extended.
Trump also said that the US would bomb Oman if it blocked US activities in the Strait of Hormuz, where tensions with Iran remain ongoing. The statements fueled concerns about the impact of regional developments on energy markets and global financial conditions.
Oil prices and US Treasury yields rise
The price of October Brent crude rose 0.6% to $91.4 a barrel. The increase in oil prices strengthened concerns that inflationary pressures would intensify, while selling was seen in the bond market.
The yield on the US 10-year Treasury note rose 6 basis points to 4.73% after falling to 4.67% the previous day, and stabilized at 4.74% today. The yield on the US 30-year Treasury bond also reached 5.32%, its highest level since 2007.
Geopolitical risks increased demand for safe-haven assets, lifting the dollar index 0.1% to 99.7. The price of gold fell 0.5% to $4,394 an ounce.
US stocks decline
The manufacturing index released by the Federal Reserve Bank of New York rose to 20.6 in August, reaching its highest level in more than four years. The index exceeded market expectations.
US chipmaker Nvidia announced that it would invest $1.5 billion in SB Energy under an agreement related to the artificial intelligence factory OpenAI will establish in Ohio. Despite the announcement, the company’s shares fell 0.9% in after-hours trading.
On the New York Stock Exchange, the Dow Jones index fell 0.51%, the S&P 500 declined 0.52% and the Nasdaq dropped 0.32%. US index futures also opened lower.
Losses deepen in Europe and Asia
Rising energy prices and geopolitical tensions created a selling-oriented trend in European stock markets. The FTSE 100 index in the UK fell 0.28%, France’s CAC 40 declined 0.66% and Germany’s DAX 40 dropped 0.38%. Italy’s FTSE MIB 30 rose 0.01%. European index futures also opened lower.
Geopolitical risks and rising bond yields were also felt across Asian markets. Japan’s 10-year government bond yield rose to 2.94%, its highest level since 1996.
Near the close, the Nikkei 225 fell 1.9%, South Korea’s Kospi declined 0.9%, China’s Shanghai Composite dropped 0.4% and Hong Kong’s Hang Seng fell 0.7%.
Borsa Istanbul closes lower
The BIST 100 index at Borsa Istanbul ended the session, marked by heavy selling, down 0.28% at 14,132.06 points. The August futures contract based on the BIST 30 index also fell 0.03% in the evening session compared with the regular-session close.
The dollar/Turkish lira exchange rate ended the previous day up 0.1% at 47.9150. The rate traded at 47.9200 at the opening of the interbank market.
Turkey’s July house price index will be monitored domestically. Abroad, a busy data agenda will be followed, led by Germany’s and the euro area’s August ZEW economic sentiment indexes and the US July industrial production figures. In the BIST 100 index, 14,000 and 13,900 points stand out as support levels, while 14,300 and 14,400 points are seen as resistance levels.
Economic data calendar
- 10:00: Turkey’s July house price index
- 12:00: Germany’s and the euro area’s August ZEW economic sentiment indexes
- 15:30: US July housing starts and building permits
- 16:15: US July industrial production and capacity utilization rate
- 17:00: US July pending home sales
