Morning Brief: Uncertainty Persists, Hope Builds as Israel–Lebanon Dialogue Eases Markets

Global markets are showing cautious optimism after signs of dialogue between Israel and Lebanon, even as severe disruptions in oil flows through the Strait of Hormuz keep energy supply concerns elevated. While investors increasingly believe the worst may be over, geopolitical risks and tighter financial conditions continue to cloud the outlook.

Hormuz Disruptions Keep Energy Markets on Edge

Oil flows through the Strait of Hormuz remain heavily constrained, sustaining pressure on global energy markets. Before the war, roughly 138 tankers passed through the strait daily, accounting for nearly 20% of global oil supply. Now, traffic has slowed to a near standstill.

This sharp decline suggests that the ceasefire has yet to fully translate into stability on the ground. Washington has accused Tehran of failing to comply with the agreement, while Iran points to ongoing Israeli operations in Lebanon as justification for its stance.

Israel–Lebanon Dialogue Offers Fragile Relief

Amid ongoing ceasefire disputes, a new diplomatic channel between Israel and Lebanon has emerged as a key market driver.

Lebanon’s call for direct talks, and Israel’s conditional willingness—linked to disarmament of Hezbollah and broader security guarantees—have provided a modest boost to investor sentiment.

However, disagreements persist over the scope of the ceasefire. The U.S. and Israel argue that Lebanon is not covered, while Iran and mediator Pakistan insist it is an integral part of the deal. These conflicting positions underscore the fragility of the current environment.

Still, markets appear inclined to believe that the worst-case scenario may be behind them.

Türkiye’s Treasury Borrowing Surges to TRY 1.6 Trillion in First Quarter

Oil Prices Reflect Fragile Balance

Supply concerns remain acute. With transit through Hormuz operating at less than 10% of normal levels, the risk of renewed disruption continues to underpin prices.

Brent crude, which fell toward $90 per barrel following the ceasefire announcement, has rebounded toward $97, reflecting the market’s sensitivity to developments on the ground.

U.S. Data Push Rate Cut Expectations Further Out

On the macro front, recent U.S. economic data have reshaped expectations for monetary policy.

Strong core inflation and continued resilience in the labor market have led investors to push back expectations for Federal Reserve rate cuts. Markets are now increasingly pricing in the first rate reduction as late as 2027.

This shift is adding pressure to risk assets, particularly when combined with ongoing geopolitical uncertainty.

Global Markets Show Cautious Optimism

U.S. equities ended the previous session about 0.7% higher, while Asian markets opened with a positive tone:

• Tokyo stocks rose 1.5%
• South Korea’s benchmark index gained 1.8%

In commodities, gold briefly tested $4,800 per ounce before easing to around $4,765, while silver maintained upward momentum, trading near $76.

From a technical perspective, maintaining weekly closes above $4,730 for gold and $75 for silver could support further gains.

Bitcoin Gains Quiet Momentum

Cryptocurrency markets are also showing renewed strength. Bitcoin has recovered to around $72,000 in recent sessions.

Reports that Iran may seek to collect transit fees through Hormuz in Bitcoin have added a new dimension to the crypto narrative, supporting sentiment after a prolonged period of weakness.

Analysts suggest a sustained move above $76,000 could trigger a stronger upward trend.

Turkey: Shock Manageable, but Risks Remain

Turkish Finance Minister Mehmet Şimşek described the current conflict as the largest supply shock since World War II.

While welcoming the ceasefire, Şimşek cautioned that a return to pre-war conditions could take months. He emphasized that the situation remains manageable for Turkey, with contingency plans in place for more adverse scenarios.

Nonetheless, key risks remain:

• Potential disruption to disinflation روند
• Widening current account deficit
• Pressure on tourism revenues

Central Bank Data Signal Stabilization

According to weekly data from Turkey’s central bank and banking regulator, foreign currency deposits held by residents increased by $2.8 billion in the week ending April 3. The rise was driven primarily by corporate accounts, with limited movement among individuals.

Meanwhile, the central bank’s net foreign currency position rebounded from $9.3 billion to $13.5 billion, suggesting a recovery in reserves.

Market sources indicate that the central bank may have purchased between $7 billion and $8 billion in foreign exchange following the ceasefire.

Foreign Outflows May Be Easing

Foreign investors continued to reduce their holdings of Turkish securities, with outflows totaling $1.2 billion in the week ending April 3. Cumulative outflows over the past seven weeks have reached approximately $11 billion.

However, with market panic subsiding, analysts expect capital flows to stabilize and potentially reverse in the coming weeks.

Conclusion: Fragile Optimism Dominates

Markets have found temporary relief in diplomatic developments, but the broader environment remains uncertain.

Persistent energy disruptions, elevated inflation, and tighter financial conditions suggest that the current optimism is fragile. Investors are likely to remain cautious as geopolitical and macroeconomic risks continue to evolve.