Risks around the Strait of Hormuz and the lack of any significant development indicating that US-Iran tensions were nearing an end weakened risk appetite in global markets. Oil prices rose amid concerns over energy supplies, while investors moved away from riskier assets.
A senior Iranian official was reported to have said that the country could shift from a defense-focused policy to an attack-focused policy if diplomatic efforts failed. In remarks at the Oval Office, US President Donald Trump answered “No” when asked whether the expired 60-day framework agreement would be extended.
Trump said the United States would bomb Oman if it blocked US operations in the Strait of Hormuz, where tensions with Iran continue. The statements heightened concerns about the impact of regional tensions on energy supplies and global investment conditions.
Energy prices and bond yields rise
Brent crude for October delivery rose 0.6% to $91.40 a barrel. The rise in oil prices strengthened inflationary pressures and triggered selling in bond markets.
The yield on the US 10-year Treasury note rose 6 basis points to 4.73% after falling to 4.67% the previous day, and stabilized at around 4.74% today. The yield on the US 30-year Treasury bond rose to 5.32%, its highest level since 2007.
As geopolitical risks increased demand for safe-haven assets, the dollar index rose 0.1% to 99.7. Gold fell 0.5% to $4,394 an ounce.
US stocks decline
The manufacturing index released by the New York branch of the Federal Reserve rose to 20.6 in August. The index reached its highest level in more than four years, exceeding market expectations.
US chipmaker Nvidia announced that it would invest $1.5 billion in SB Energy under an agreement related to the artificial intelligence plant OpenAI plans to build in Ohio. Nvidia shares nevertheless fell 0.9% in after-hours trading.
The Dow Jones index fell 0.51%, the S&P 500 declined 0.52% and the Nasdaq dropped 0.32%. US stock index futures also began the day lower.
Geopolitical pressure in Europe and Asia
Rising energy prices and geopolitical tensions weighed on European stocks. The FTSE 100 fell 0.28%, the CAC 40 declined 0.66% and the DAX 40 dropped 0.38%, while the FTSE MIB 30 rose 0.01%. European stock index futures also opened lower.
In Asian markets, selling pressure intensified as rising bond yields added to geopolitical risks. Japan’s 10-year bond yield rose to 2.94%, its highest level since 1996.
Near the close, the Nikkei 225 fell 1.9%, the Kospi declined 0.9%, the Shanghai Composite dropped 0.4% and the Hang Seng lost 0.7%.
Borsa Istanbul also declines
After trading under selling pressure, the BIST 100 index ended the day down 0.28% at 14,132.06 points. The August futures contract based on the BIST 30 index fell 0.03% in the evening session compared with the regular-session close.
The dollar/Turkish lira exchange rate ended the previous day up 0.1% at 47.9150. The exchange rate traded at 47.9200 at the opening of the interbank market.
Domestic markets will track the housing price index for July. Abroad, a busy data calendar will include Germany’s and the eurozone’s ZEW economic sentiment indexes for August, as well as US industrial production for July. For the BIST 100, 14,000 and 13,900 points stand out as support levels, while 14,300 and 14,400 points are resistance levels.
Key items on the economic calendar
- 10:00 — Türkiye’s housing price index for July
- 12:00 — Germany’s and the eurozone’s ZEW economic sentiment indexes for August
- 15:30 — US housing starts and building permits for July
- 16:15 — US industrial production and capacity utilization for July
- 17:00 — US pending home sales for July
