Morning Review: U.S. Optimism Fuels Global Rally, Turkey Remains Silent

Global risk appetite has strengthened amid expectations that the U.S. federal government will reopen soon. While American and Asian markets enjoy broad gains, Turkey’s financial markets remain cautious amid political tensions and regulatory uncertainty.

U.S. Markets Cheer Government Reopening Prospects

Risk appetite expanded across global markets as expectations rose for an end to the U.S. government shutdown. Industrial stocks in the U.S. gained more than 1% on Thursday, while the S&P 500 and Nasdaq moved relatively flat. Following Senate approval of a bill to end the historic closure, investors turned their attention to delayed data releases.
In the absence of official figures, the ADP private-sector jobs report indicated continued weakness in employment, reinforcing expectations of a Federal Reserve rate cut in December. The dollar index slipped slightly, with the EUR/USD pair approaching 1.16 and Brent crude testing above $65 per barrel.

Gold and Silver Extend Gains

Gold continued to rise for the fourth consecutive session, supported by a weaker dollar and rising rate-cut expectations. Spot gold reached $4,134 per ounce — a three-week high — as investor interest revived. In a low-rate environment, the search for yield boosted demand for precious metals. The probability of a 25 basis point Fed rate cut in December climbed to 68% this morning.
The world’s largest gold-backed ETF, SPDR Gold Trust, saw its holdings increase, while silver surged past $51 after closing above $49.40 the previous night. Technically, momentum could lift silver toward $53, with a breakout expected if it surpasses $54.40. The gold/silver ratio is trending in favor of silver this week and could accelerate if it drops below 77 (currently 80.50). Reflecting this outlook, we have re-entered long positions in both gold and silver.

Bitcoin Retreats as Precious Metals Shine

While traditional safe havens gain traction, “digital gold” Bitcoin fell nearly 3% to around $103,000. For a healthy bullish continuation, a weekly close above $108,000–$109,000 is needed.
In FX markets, Japanese Prime Minister Sanae Takaichi signaled fiscal flexibility and urged the Bank of Japan to move cautiously on rate hikes, pushing the yen to its weakest level in nine months at 155 per dollar. Should USD/JPY rise above 158, Tokyo may intervene verbally, as it did last July when the pair neared 162.

Asia Joins the Optimism, AI Bubble Fears Return

Asian markets mirrored the upbeat tone, with Korea and Hong Kong tracking global gains even as Japan’s benchmark index traded flat. SoftBank’s $5.8 billion sale of Nvidia shares reignited concerns of an AI bubble. The company aims to fund AI-driven strategies through the sale, but the timing fueled worries of excessive valuations. Nvidia’s shares fell 3%, with Wall Street analysts warning of a possible AI correction.
Although SoftBank’s move is meant to raise capital, history shows that previous early exits from Nvidia positions resulted in missed profits. As noted before, tech bubbles are rarely identified before they burst. With the year’s final quarter typically bullish, we prefer not to overreact to bubble fears.

“Magnificent Seven” Rebound and Market Strategy

After Trump’s tariff announcements in April drove the “Magnificent Seven” (Nvidia, Apple, Microsoft, Alphabet, Amazon, Meta, Tesla) to a combined market cap of $14 trillion, their valuation has now rebounded above $24 trillion, with Nvidia alone near $5 trillion. Given this rapid rise, new positions appear challenging. Maintaining existing holdings and waiting for better entry points is the prudent approach.
While we do not expect an imminent bubble burst, the “needle” could appear in May if Fed leadership changes and rates fall rapidly.

Political Risks Hit Turkish Markets

In Turkey, political risk once again dominated headlines and directly influenced market pricing. A legal development sparked speculation that the CHP might be shut down, prompting panic selling in bank stocks — at one point falling nearly 5%.
Later clarifications revealed no closure motion had been filed; rather, the Chief Prosecutor’s Office was notified of financial irregularities as a legal formality. While losses were partially recovered, the main BIST index fell 2% and the banking sub-index 2.4%.

Regulatory Pressures and Liquidity Constraints

Concerns over market manipulation, anti–money laundering probes, and tighter liquidity conditions have intensified selling pressure — particularly in small-cap stocks. Over the last three days, the BIST 100 dropped nearly 5%, while bank shares, affected by post–Inflation Report volatility, slid almost 7%.
The USD/TRY rate inched up to 42.24 under official control, while 5-year CDS premiums remained steady at 246 basis points.

Global Rally Continues, Turkey Cautious

While global sentiment improves on optimism about U.S. developments, Turkey’s markets continue to move cautiously. U.S. futures are slightly higher this morning, and precious metals remain strong. Broadly, we expect the dollar to continue weakening.
As we have repeatedly emphasized, Trump’s tariff wars and his preference for a weaker dollar to gain a competitive edge suggest that short-term pullbacks offer opportunities to sell the greenback. November has historically been a positive month, and we expect the final quarter to sustain this optimism.

Today’s economic calendar includes Turkey’s current account balance and Germany’s CPI data.

Emre Değirmencioğlu
Group Manager, Treasury Department, Cyprus Iktisat Bank

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