Morning Brief: Markets in Easter Pause as Energy Shock Clouds Outlook
piyasa3
Rising geopolitical tensions between the U.S. and Iran are driving a sharp energy shock, pushing oil prices higher and worsening global inflation risks. With markets partially closed for Easter, investors are focusing on upcoming U.S. labor data and inflation signals, while volatility and uncertainty remain elevated.
Energy Shock Deepens as Hormuz Closure Disrupts Supply
Escalating tensions between the United States and Iran continue to send shockwaves through global energy markets.
With the Strait of Hormuz effectively closed, nearly one-fifth of global oil trade is under threat. Oil prices surged sharply, with U.S. West Texas Intermediate (WTI) crude rising more than 11% above $112 per barrel, while Brent crude climbed to around $109.
In a rare development, WTI traded above Brent—highlighting the severity of supply dislocations.
The surge is not only impacting energy markets but also significantly worsening global inflation expectations and growth prospects. For energy-importing economies, rising input costs are beginning to feed into broader economic stress, while supply chain disruptions are re-emerging.
War Duration Now Driving Market Pricing
Markets are increasingly pricing in a prolonged conflict rather than a short-lived escalation.
Expectations of a quick resolution have faded, partly due to inconsistent messaging from U.S. President Donald Trump. As a result, oil prices remain under upward pressure amid fears that the Strait of Hormuz could stay closed longer than initially expected.
In the U.S., gasoline prices have climbed back above $4 per gallon—raising political risks for the administration.
However, the greater concern lies in diesel markets. While less visible to consumers, rising diesel prices affect the entire production and logistics chain, posing a significant upside risk to global inflation.
Asset Prices Show Unusual Volatility
Recent market behavior has been marked by sharp and sometimes counterintuitive moves.
Earlier in the week, markets briefly priced in a potential de-escalation:
- Equities rallied
- The U.S. dollar weakened
- Precious metals gained
This pattern quickly reversed.
Gold rose to around $4,800 per ounce but failed to hold above the $4,750 technical level, retreating to $4,675. Silver showed greater resilience, ending near $73.
The U.S. dollar index (DXY) rebounded above 100, while the euro slipped to 1.1530 against the dollar. Bitcoin also weakened, falling back toward the $63,000–$66,000 range.
Türkiye Faces Mounting Economic Pressures
In Türkiye, the indirect effects of the energy shock are becoming increasingly visible.
As a net energy importer, the country is particularly exposed:
- Inflation risks are rising
- The current account outlook is deteriorating
Preliminary trade data showed the March trade deficit widening by 57% year-on-year to $11.3 billion—an early indication of the war’s economic impact.
Capital Outflows and Reserve Dynamics in Focus
Foreign investors continue to reduce exposure to Turkish assets, while the central bank is working to stabilize markets.
In the week ending March 27:
- Domestic FX deposits rose by $2.2 billion
- The increase was largely driven by precious metals accounts
This suggests local investors are taking advantage of recent declines in gold prices.
Meanwhile, foreign investors recorded $1.3 billion in outflows from equities, government bonds, and eurobonds.
After accounting for swaps and easing gold prices, the central bank’s net FX position improved to $9.3 billion as of April 1.
However, gold reserves declined by 121 tons over the past three weeks, falling to 702.5 tons.
Central Bank Likely to Maintain Tight Stance
The Central Bank of the Republic of Türkiye (CBRT) appears committed to maintaining a tight monetary stance to counter inflationary pressures and stabilize FX markets.
If global conditions deteriorate further, policymakers may consider additional tightening, including rate hikes.
Focus Turns to Inflation and U.S. Jobs Data
Markets are now awaiting key data releases.
In Türkiye, March inflation is expected to rise around 2.3% month-on-month. However, the full inflationary impact of the energy shock is likely to be felt in the coming months.
In the U.S., expectations are for:
- Nonfarm payrolls to increase by 60,000
- Unemployment to hold at 4.4%
Any deviation from expectations could trigger fresh volatility.
Easter Holiday: Low Liquidity, High Sensitivity
A significant portion of global markets is closed for Good Friday and Easter Monday.
The extended four-day break is increasing investor caution, as markets typically avoid holding large risk positions over long holiday periods—especially amid geopolitical uncertainty.
Diplomatic Efforts Offer Limited Relief
Efforts to reopen the Strait of Hormuz are ongoing, but progress remains limited.
Although around 40 countries have participated in discussions, the absence of concrete outcomes—and the lack of direct U.S. involvement—suggests that uncertainty will persist.
Still, talks between Iran and Oman have provided some marginal easing of tensions.
Market Snapshot: Mixed Signals Across Regions
U.S. equities ended the previous session flat, while futures are slightly lower.
In Asia:
- Japan’s Nikkei rose about 1%
- South Korea’s market gained roughly 2%
- Other regional markets showed mixed or negative performance
Conclusion: Volatility Here to Stay
The overall picture points to a fragile and uncertain market environment:
- Energy prices remain elevated
- Geopolitical risks are unresolved
- Monetary policy expectations are shifting
In the near term, markets are likely to remain volatile and highly sensitive to headlines.
By: Emre Değirmencioğlu, Kıbrıs İktisat Bankası
PA Turkey intends to inform Turkey watchers with diverse views and opinions. Articles on our website may not necessarily represent the view of our editorial board or count as endorsement.
Follow our English YouTube channel (REAL TURKEY):
https://www.youtube.com/channel/UCKpFJB4GFiNkhmpVZQ_d9Rg
Twitter: @AtillaEng
Facebook: Real Turkey Channel: https://www.facebook.com/realturkeychannel/***
