US midterm outcome may bolster Türkiye’s markets

ISTANBUL

The Democrats’ landslide victory in the U.S. midterm elections has encouraged buying across global stock markets, analyst Zeynel Balcı has said.

Oil prices declined, the dollar weakened and bond yields eased following the election results, while gold and silver prices rose on the back of those developments, according to Balcı.

Looking specifically at Türkiye, a calmer geopolitical environment would be particularly favorable for the country, he argued.

“A calmer region will benefit everyone, but it will be even more positive for Türkiye given its proximity to Iran,” Balcı said.

The decline in oil prices could also help curb Türkiye’s renewed inflationary pressures and slow the widening of its current account deficit, he added.

According to Balcı, these developments could also provide a reference point for another interest rate cut at the Turkish Central Bank’s meeting on Dec. 10.

“The rebound in Borsa Istanbul, which had faced a sharp sell-off due to the fund investigation and is considered cheap and yet to rally, could continue for some time, supported by optimism in global markets,” Balcı said.

“In short, it would be appropriate at this stage to view the post-election market movements as an initial reaction,” Balcı said. “Whether they become permanent will largely depend on Trump’s stance and the course of U.S.-Iran relations,” he added.

In a note published following the release of the October inflation data, ING said the Turkish Central Bank was likely to continue its rate-cutting cycle in December.

“In our view, October inflation is unlikely to be a game changer here,” ING said.

BBVA Research, however, continues to expect the Central Bank to leave rates unchanged at its December meeting, citing elevated energy prices and recent pressure on reserves.

“Nevertheless, should energy price pressures ease and reserve conditions stabilize, a 100bp rate cut, broadly in line with market consensus, cannot be ruled out,” BBVA Research said.