Daily Bulletin

Good morning. Global risk appetite is weakening this morning. While there is no clear trigger behind this move, the underperformance of recent expectations and the postponement of anticipated Fed rate cuts to later dates are contributing factors. On the other hand, yesterday’s stronger-than-expected employment data in the U.S., along with progress in the legislative process of a plan that includes tax cuts and additional spending, are seen as supportive developments. On Borsa Istanbul, the BIST 100 Index edged higher yesterday, once again moving above the 10,200 level. Although capital inflows are slowing, we believe the positive momentum remains intact. As long as the BIST 100 holds above the 10,000 mark, our short-term targets remain at 270 USD and 297 USD (corresponding to TRY 10,800 and above 11,500, respectively), as shared previously. The agenda for the day is relatively light, with only Eurozone PPI data on the calendar. Turkey’s 5-year CDS starts the day below 280 basis points, at 277 bps. Continued improvement in CDS levels and ongoing expectations for a potential rate cut from the CBRT at the July 24 MPC meeting—following yesterday’s inflation print—are likely to support the positive outlook for the banking sector index (XBANK). This supportive environment is not only relevant for banks but also benefits all sectors and companies listed on Borsa Istanbul from a valuation standpoint. Unless non-economic risks resurface, we expect the positive trend in Borsa Istanbul to continue.