Economic contacts between the United States and China, along with expected leader-level meetings ahead of the United Nations Summit, supported the start of the week in global markets. While hawkish expectations regarding the Federal Reserve's interest-rate policy persisted, diplomatic activity increased demand for riskier assets.
Regional tensions in the Middle East and the conflict between Russia and Ukraine continue to sustain concerns over energy supplies. Rising fuel prices also continue to put pressure on growth and inflation expectations.
Diplomacy shapes the outlook for oil and interest rates
Rising energy costs in the United States strengthened hawkish expectations regarding the Fed's monetary policy. Alongside the Fed's first interest-rate increase since July 2023 last week, money-market pricing became concentrated around the possibility of another rate hike by the end of the year. Statements from numerous Fed officials will be monitored this week.
Numerous leader-level meetings, particularly between the United States and China, are expected to take place at the UN Summit in the United States. Expectations that these contacts could produce positive results and reduce geopolitical risks contributed to oil prices starting the week lower.
The decline in oil prices partly eased inflation concerns while increasing interest in riskier assets. Analysts assess that a reduction in problems related to oil supplies could make the economic outlook and central banks' policy paths more predictable.
U.S.-China trade talks in New York
Ahead of Chinese President Xi Jinping's expected visit to the United States, U.S. and Chinese delegations met in New York to discuss economic and trade issues. The talks were led by U.S. Treasury Secretary Scott Bessent for the United States and Vice Premier He Lifeng for China.
Speaking after the meeting, which continued throughout the day at JPMorgan Chase's headquarters in Manhattan, Bessent said the United States and China had held a successful discussion on trade and artificial intelligence. Bessent said the sides had agreed to meet again and that the United States had proposed establishing a notification mechanism between the two countries.
U.S. Ambassador to the United Nations Mike Waltz said the door remained open for Iran to return to the negotiating table.
Oil and bond yields guide U.S. markets
The yield on the U.S. 10-year Treasury note started the week flat at around 5%. The dollar index, which rose to 100 last week amid expectations that the Fed could raise interest rates consecutively, also began the new week near those levels.
As high bond yields and a strong dollar increased the opportunity cost of alternatives, gold fell 0.5% to $4,355 per ounce. November-dated Brent crude also fell 2.1% to $101.7 per barrel on diplomatic expectations.
On the New York Stock Exchange, the S&P 500 rose 0.17% and the Nasdaq gained 0.3% on Friday. The Dow Jones index, meanwhile, fell 0.18%. U.S. index futures started the week higher.
Europe watches energy and the Russia-Ukraine war
European stock markets ended Friday lower. In addition to developments at the UN General Assembly, markets will monitor energy prices and the Purchasing Managers' Index data from countries in the region.
Concerns over oil and gas supplies amid tensions in the Middle East are keeping investors cautious in Europe. The renewed escalation of the conflict between Russia and Ukraine is also keeping geopolitical risks high.
Russia's Defense Ministry announced that it had struck a logistics center used for military purposes, as well as warehouses and ships, in Ukraine. Ukrainian President Volodymyr Zelenskyy said he had discussed efforts to end the war with U.S. President Donald Trump and that they had also discussed a meeting planned to take place in New York in the coming days.
Zelenskyy said they had agreed to meet in New York and that a diplomatic process was continuing. As high energy costs continued to pressure Europe's economy, 10-year bond yields in Germany, the United Kingdom and France rose.
On Friday, the FTSE 100 in the United Kingdom fell 1.45%, Italy's FTSE MIB 30 declined 1.60%, France's CAC 40 dropped 1.49% and Germany's DAX 40 fell 1.60%. European index futures, meanwhile, started the week higher.
U.S.-China expectations boost risk appetite in Asia
Positive signals from talks between the United States and China stood out in Asian stock markets. Expectations of a positive outcome from the meeting expected to take place this week between U.S. President Donald Trump and Chinese President Xi Jinping supported risk appetite in regional markets.
Xi Jinping is expected to visit the United States on September 23. During Trump's second term in office, U.S. tariff increases and technology restrictions, along with China's control over rare-earth elements, have been among the main issues in the dispute between the two countries.
Following the meeting between Trump and Xi Jinping in Busan, South Korea, on October 30, 2025, the sides issued positive messages about a temporary agreement on the issues in dispute. Falling oil prices also contributed to risk appetite in Asian markets.
Near the close, South Korea's Kospi index rose 1.3%, China's Shanghai Composite gained 0.5% and Hong Kong's Hang Seng index increased 0.5%. Markets in Japan remained closed for a holiday.
Markets in Türkiye monitor Erdoğan's New York visit
The BIST 100 index on Borsa Istanbul ended Friday down 1.67% at 13,284.42 points. The October contract based on the BIST 30 index on Borsa Istanbul's Futures and Options Market also fell 0.14% in the evening session compared with the regular-session close.
President Recep Tayyip Erdoğan arrived in New York, United States, to attend the 81st UN General Assembly and hold various meetings.
The Capital Markets Board extended the liquidation period for funds slated for liquidation from three months to six months, taking into account their portfolio structures and market developments. On September 17, the board had authorized Türkiye İş Bankası and Ziraat Bank to oversee processes related to 131 investment funds being liquidated by seven portfolio management companies.
USD/TRY ended Friday at 48.7650. At the opening of the interbank market, the exchange rate reached 48.8010, up 0.1% from the previous close.
Capacity utilization, the real-sector confidence index and August data for the Producer Price Index for Products Sold Abroad will be monitored domestically. In the BIST 100 index, 13,100 and 13,000 points are being watched as support levels, while 13,400 and 13,500 points are viewed as resistance levels.
