Morning Preview: DXY and Oil Surge on Trump’s Iran Ultimatum: Borsa Istanbul Faces Heavy Profit-Taking

Escalating geopolitical tensions in the Middle East, coupled with a resurgent U.S. Dollar (DXY) and soaring oil prices, have triggered a wave of risk aversion across global markets. Borsa Istanbul felt the brunt of this shift, as domestic investors moved to cash out ahead of what promises to be a volatile weekend.

The latest flashpoint comes from U.S. President Trump, who issued a stark 15-day ultimatum to Iran regarding its nuclear program, warning of “very bad things” if a meaningful deal is not reached. With U.S. aircraft carriers deployed to the region and Tehran threatening to target American bases, the “war risk” premium is being aggressively priced back into the markets.

Energy and Currency Markets on Edge

The primary concern for global trade remains the Strait of Hormuz, a vital artery for 20% of the world’s oil supply.

• Oil Peaks: Brent crude has surged above $72 per barrel, nearing a seven-month high. The year-to-date increase now stands at a staggering 18%.

• DXY Resurgence: The U.S. Dollar Index is set to close its strongest week in four months. Strong U.S. data and hawkish Fed minutes—suggesting no rush to cut rates—have pushed the EUR/USD pair down to 1.1750.

• Safe Havens: Gold remains in a “wait-and-see” posture around the $5,000 mark, while Silver has reclaimed the $78 level.

Turkish Markets: A “Double Whammy”

For Turkey, a net energy importer, the combination of rising oil prices and a regional war threat is a toxic mix for inflation and current account deficit targets.

• Equities: The BIST100 index plunged 3.2% yesterday, with the banking sector hit even harder, losing 4.4%.

• Risk Metrics: Turkey’s 5-year CDS rose by nearly 10 basis points to 228, the highest level this year.

• Currency: The USD/TRY exchange rate remains under managed stability, hovering around 43.75.

Analysis: Why the Sudden Pivot?

Editor’s View: Strategic Exit from Equities Until mid-week, the Turkish equity rally looked sustainable. However, the intensity of yesterday’s selling pressure, coupled with rumors involving Treasury and Finance Minister Mehmet Şimşek and political shifts, forced a tactical retreat.

1. The “Weekend Risk” Hedge: Taking profits now is a defensive move against potential weekend escalations in the Middle East. Many investors have pivoted back into Gold long positions at the $5,000 entry point, with plans to increase exposure if $5,100 is breached.

2. The Foreign Interest Paradox: Despite the sell-off, Central Bank (TCMB) data shows that foreign appetite for Turkish assets remains high. In the week ending Feb 13, $3 billion flowed into Turkish stocks and bonds, bringing the seven-week total to an impressive $13 billion. This suggests that while local sentiment is jittery, global institutional confidence in the “orthodox” policy remains intact.

3. The “Gold-ization” of Deposits: A striking trend is emerging in domestic savings. Precious metal deposit accounts now make up 38.52% of total foreign currency deposits in Turkey. Among individual savers, this ratio is a massive 60.25%. Turks are effectively using gold as their primary hard currency, a trend that even impacts the Central Bank’s gross reserves due to price fluctuations.

Looking Ahead: The Technical Compass

While Bitcoin struggles to hold the $67,000 level and the DXY tests a critical 15-year resistance at 98, the focus remains on macro data. Today’s U.S. PCE (Personal Consumption Expenditures) data will be the ultimate guide for the Fed’s next move.

Summary: The “lemon” mood in global markets is likely to persist until the Iran ultimatum reaches its deadline. For Borsa Istanbul, the long-term “bull” case remains supported by foreign inflows, but the short-term path is undeniably clouded by the smoke of regional war drums.

By Emre Degirmencioglu, Cyprus Iktisat Bank