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Morning Brief: Markets whipsawed by Iran war headlines as brief “Trump rally” fades

markets-volatility

Global markets opened the week in panic mode before briefly stabilizing on reports of US–Iran diplomatic progress. The relief rally quickly faded after Tehran denied any negotiations, triggering renewed volatility across oil, equities, and precious metals. Meanwhile, Türkiye is increasingly feeling the economic spillovers through rising energy costs, capital outflows, and declining reserves.

Panic selling gives way to short-lived rebound

Global financial markets started the week with aggressive liquidation, as investors rushed to de-risk amid escalating geopolitical tensions.

A temporary recovery followed reports suggesting:

  • “Constructive” US–Iran discussions
  • Potential pathways toward de-escalation

Equities rebounded and precious metals reversed losses — but the optimism proved short-lived. Iran swiftly denied any talks, sending markets back into uncertainty.

Diplomatic signals mixed, uncertainty deepens

Despite Iran’s official denial, reports indicate that:

  • Türkiye, Egypt, and Pakistan are involved in indirect mediation
  • Backchannel communication between US and Iranian officials may be ongoing

These developments suggest diplomacy is not entirely off the table, even as official positions remain contradictory.

Oil swings highlight fragile sentiment

Energy markets reacted sharply to shifting headlines.

  • Brent crude surged to $115 per barrel intraday
  • Later fell below $100 by the close

At the start of the new session:

  • Prices rebounded to around $104

This volatility underscores the market’s sensitivity to geopolitical developments.

Gold and silver suffer sharp losses

Precious metals experienced significant swings amid panic-driven trading.

  • Gold dropped from $5,400 to $4,097
    • A loss of roughly 25% in 15 trading days
  • Silver fell from $96 to $60
    • A decline of nearly one-third of its value

Both metals later staged partial recoveries as buying interest returned.

Is the CBRT heading toward a rate hike?

Information chaos fuels volatility

Conflicting statements from political leaders intensified market instability.

  • US President Donald Trump hinted at ongoing contacts
  • Iranian officials firmly rejected such claims

The contradictory flow of information created:

  • Extreme price swings
  • Concerns over market transparency

In some cases, unusual trading patterns sparked discussions about possible insider activity.

US seen searching for exit strategy

Market interpretation increasingly suggests:

  • The US may be seeking a strategic exit from the conflict
  • Iran is leveraging its perceived psychological advantage

However, both sides are facing mounting economic and military costs.

Türkiye feeling indirect economic impact

Although not directly involved in the conflict, Türkiye is experiencing spillover effects.

Key pressures include:

  • Rising energy prices
  • Tourism-related concerns
  • Deteriorating inflation and current account outlook

Turkish assets hit by Iran war fallout as foreign investors exit

CBRT reserves decline sharply

Türkiye’s central bank reserves have come under pressure.

  • Net FX position declined by $35 billion in 14 trading days
  • Net reserves (excluding swaps): down to $35 billion
  • Compared to a peak of $82 billion in late January

Falling gold prices have further contributed to reserve erosion.

Foreign outflows accelerate

Capital outflows have intensified amid heightened risk.

  • Weekly outflow (ending March 13): $3.6 billion
  • Of which $2.9 billion came from bonds
  • Total outflows over two weeks: $6.2 billion

Notably, domestic investors have not significantly increased FX demand.

FX outlook relatively stable for now

The lack of strong domestic demand for foreign currency is helping:

  • Contain pressure on the Turkish lira

At this stage, currency risk appears manageable despite external shocks.

Risk sentiment weakens again

Markets began the new session on a cautious note.

  • Iran rejected negotiation claims
  • Strait of Hormuz risks remain elevated

Asian markets showed limited recovery:

  • South Korea: +2% (after a ~7% drop)
  • Tokyo: +0.5%

Meanwhile, US and European futures declined by around 1%.

Kıbrıs İktisat Bankası, Emre Değirmencioğlu

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