Morning Brief: Risk Appetite Returns as War Fears Ease — Bitcoin Rebounds, Turkey Flat, CBRT Reserves Down
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Global financial markets staged a partial recovery after the heavy liquidation seen earlier in the week. With fears of further escalation in the Iran war easing somewhat, Asian equities rebounded sharply and Bitcoin surged. However, energy markets remain under pressure as disruptions around the Strait of Hormuz continue to threaten global oil and LNG supply.
Asian Markets Rebound After Historic Selloff
Earlier this week, global markets experienced a wave of liquidation as investors rushed into cash and the US dollar strengthened sharply as a safe haven.
The shock was particularly visible in Asia. South Korea’s Kospi index plunged more than 12%, triggering one of the most dramatic selloffs in recent years. The South Korean won also weakened to its lowest level against the US dollar in 17 years.
However, markets began stabilizing overnight.
As expectations grew that the Middle East conflict may not escalate further, Asian equities quickly recovered a large portion of their losses.
The Kospi index rebounded more than 10% on Thursday morning, leading the regional recovery, while most Asian stock markets turned decisively positive.
Bond Yields Rise as Safe-Haven Demand Softens
As risk appetite returned, US Treasury yields moved higher, reflecting reduced demand for safe-haven assets.
The US dollar, which had been under pressure in recent months amid uncertainty surrounding the economic agenda of President Donald Trump, once again demonstrated its safe-haven status during geopolitical turmoil.
The Dollar Index (DXY) climbed above 99, marking a recovery of nearly 5% from the lows seen in late January.
Part of the stabilization in markets was linked to a report from the New York Times, which suggested that Iranian intelligence had reached out to the CIA during the early days of the war in an attempt to explore possible de-escalation channels.
Although Tehran quickly denied the claim, the mere possibility of a diplomatic channel helped restore some investor confidence.
Energy Markets Remain on Edge
Despite the improvement in broader market sentiment, the geopolitical outlook remains fragile.
The US Senate’s support for President Trump’s military operation against Iran suggests that the conflict could continue for some time.
Energy markets remain highly sensitive to developments.
Brent crude approached $84 per barrel, maintaining strong upward momentum.
Tensions escalated further after reports that a US naval operation targeted an Iranian warship near Sri Lanka, increasing concerns about wider disruption to global energy supply.
Meanwhile, the Strait of Hormuz — through which roughly one-fifth of global oil and LNG supply passes — is facing severe disruption.
Current reports indicate:
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Nearly 200 oil, LNG and cargo vessels are waiting offshore
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Tanker traffic through Hormuz has slowed dramatically
Qatar has halted LNG production, while Iraq has been forced to reduce oil output due to storage constraints.
Loading operations are also reportedly disrupted in Saudi Arabia, the UAE and Kuwait.
As a result, Brent crude has surged nearly 20% over the past four days.
If disruptions in Hormuz persist, analysts warn that global oil inventories could decline rapidly, potentially triggering further volatility in energy markets.
What the Iran War Means for Türkiye: Inflation, Energy Risks and Geopolitics
Gold and Silver Pause After Sharp Liquidation
While oil continues to climb, gold and silver are currently trading in a cautious wait-and-see mode.
During Tuesday’s liquidation wave, gold fell sharply from $5,400 to $4,995, while silver dropped from $96 to $77.
Many investors chose to lock in profits and temporarily move into US dollar positions while monitoring developments in the Middle East.
If diplomatic progress emerges and Hormuz shipping lanes reopen, analysts expect the dollar’s recent strength to fade and precious metals to resume their upward trend.
Even if this scenario currently appears uncertain, political considerations could play a role.
A prolonged conflict could drive energy prices higher and potentially undermine President Trump’s political standing ahead of the US midterm elections. Rising energy costs or potential US military casualties could quickly shift domestic political dynamics.
For this reason, markets continue to assign some probability to a negotiated outcome to the conflict.
Bitcoin Surges as Crypto Sentiment Improves
The improving risk environment also spilled into digital assets.
Bitcoin, which had been trading quietly around $66,000 for weeks, suddenly surged to $74,000.
The rally disrupted the downward technical pattern that had been forming in recent weeks.
Investor sentiment toward crypto was also boosted by remarks from President Trump, who called for faster progress on crypto regulation while criticizing banks for slowing digital asset reforms.
The move suggests growing expectations that the US could soon introduce a clearer regulatory framework for digital assets.
From a technical perspective, if the rebound proves sustainable rather than a “dead cat bounce,” analysts see potential upside toward $93,000–$94,000, representing the 50% retracement between the recent peak and trough.
Türkiye Markets: Cautious Stability
Turkish markets attempted to participate in the global rebound, though regional tensions introduced additional uncertainty.
Reports that a missile originating from Iran was intercepted by NATO defense systems while heading toward Hatay briefly unsettled investors.
Following liquidity measures introduced by the Central Bank of the Republic of Türkiye (CBRT) over the weekend, the TL reference rate (TLREF) climbed toward 40%.
The CBRT has also issued liquidity bills in recent days to sterilize excess lira liquidity and prevent increased demand for foreign currency.
Data from the central bank’s analytical balance sheet shows that net foreign currency reserves fell by $8.6 billion in transactions settled on March 3.
The recent sharp drop in gold prices also added pressure to reserves.
In equity markets, the banking index fell 0.7% following the missile news, while the broader BIST 100 index closed the day flat.
Notably, the banking sector has declined 13% over the first three trading days of the week, partly reflecting expectations that the CBRT will delay interest rate cuts at its upcoming policy meeting.
Türkiye’s CDS risk premium declined by roughly 10 basis points to around 240.
Data to Watch
Key data releases today include:
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US weekly jobless claims
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CBRT and BDDK weekly banking data
Tomorrow, markets will focus on the US nonfarm payrolls report, the most closely watched labor market indicator.
Source: Kıbrıs İktisat Bankası
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