Analyst: Market Volatility Likely to Persist Amid Political and Monetary Uncertainty

Istanbul’s stock market remains under pressure as the Borsa Istanbul (BIST 100) index struggles to maintain upward momentum and retreats toward key support levels. Analysts say that political uncertainty surrounding the October 24 CHP Congress court case and the Central Bank of Turkey’s (CBRT) October 23 policy meeting will be pivotal for market direction.

CBRT Rate-Cut Expectations Diminish

September inflation exceeded forecasts, rising above 33%, which weakened expectations for further monetary easing. CBRT Governor Fatih Karahan has repeatedly emphasized the importance of maintaining a tight monetary stance, consistent with the bank’s commitment to disinflation.

Although inflation remains high, analysts note that with the policy rate currently at 40.5%, there is still a modest gap — roughly 7 percentage points — that allows limited room for a rate cut. Markets currently price in the possibility of a 150 basis-point cut at the October 23 meeting and up to 300 basis points in total cuts by year-end.

However, unless inflation softens in October, the CBRT may find its policy flexibility significantly constrained.

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Politics Overshadows Market Fundamentals

Market analysts highlight that political developments now carry more weight than macroeconomic data in shaping investor sentiment.

“The CHP Congress court ruling on October 24 could influence whether a 150 bps rate cut has any positive impact on markets,” said one analyst, noting that “political risk remains the dominant factor.”

According to experts, the economy tends to stabilize only when political uncertainty eases — and investors are increasingly trading based on political signals rather than corporate fundamentals.

Earnings Season Begins: Select Stocks in Focus

Investors are now turning their attention to the September 2025 earnings season, set to begin in the coming days. Expectations are muted due to weak economic momentum and the effects of inflation accounting, though some companies may still deliver upside surprises.

Zeynel Balcı, columnist at Hürriyet, said that while almost half of listed firms posted losses in the June 2025 reporting period, several key players could post stronger results this quarter.

“Without making any investment recommendations, the earnings of banks, Aselsan, Turkish Airlines (THY), Tüpraş, Turkcell, Ereğli Demir Çelik, BİM, Migros, Koç Holding, and Sabancı Holding will be closely watched,” he noted.

Still, Balcı warned that corporate results alone are unlikely to reverse the broader market trend, though they may trigger short-term stock-specific movements.

Foreign Investors Remain Cautious

CBRT data shows that in the week ending October 10, foreign investors sold $109 million worth of equities but bought $307 million in government bonds. This suggests that while foreigners are taking profits in stocks, they remain interested in fixed-income assets.

Meanwhile, CBRT reserves and domestic foreign-currency deposits continued to rise, partly supported by higher gold prices.

Technical View: Support Levels in Play

Borsa Istanbul’s recovery attempts have met with renewed selling pressure. Analysts identify the following levels as key:

• Immediate supports: 10,000 – 9,950

• Next support zones: 9,700 and 9,500

• Resistance levels: 10,500 and 10,700 – 11,000

Short-term rebounds are possible at support levels, but the market lacks the momentum for a sustained rally.

“The BIST 100 index is expected to remain volatile, with political events and policy decisions dictating the tone,” Balcı wrote.

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