Global Markets Start Volatile Week in Red Amid Geopolitical Risks and Fed Uncertainty

Global financial markets launched the new week on a negative note as geopolitical tensions in the Middle East, looming uncertainty over the Federal Reserve's interest rate trajectory, and anticipation of tech giant Nvidia's earnings weigh heavily on investor sentiment.

Geopolitical Tensions in Hormuz and the Inflationary Grip

With no concrete progress in US-Iran negotiations and US Treasury Secretary Scott Bessent poised to announce new sanctions, risk premiums in key energy corridors remain elevated, keeping global inflationary concerns alive.

■Brent crude futures fell 1.5% to trade at $93 per barrel.

■Geopolitical clouds over the Strait of Hormuz drove safe-haven demand; spot gold rallied to a 3.5-month high of $4,657 before trading at $4,638 per ounce, up 0.7%.

■Stubbornly high energy costs keep market expectations for a rate hike by the European Central Bank (ECB) next month near 100%.

Fed Conundrum and Treasury Yield Shifts Ahead of Jackson Hole

While money markets price in only a single rate hike by the Fed through year-end, all eyes are on Fed Governor Kevin Warsh's upcoming speech at the Jackson Hole Economic Symposium on Friday.

■The US 10-year Treasury yield started the week down 3 basis points at 4.71%.

■The US 2-year Treasury yield slipped 2 basis points to 4.23%.

■The US Treasury’s decision to double its long-term bond buyback operations pressured the greenback, leaving the Dollar Index (DXY) flat at 98.8.

AI Giants Face Reality Check: Nvidia and Asian Sell-off

The sustainability of the AI-driven market rally will be put to the test this week with earnings from Nvidia, the world's most valuable company. Meanwhile, disappointing corporate announcements triggered sharp declines in Asia.

■Chinese e-commerce giant Alibaba plummeted 9.8% on reports of a $10.2 billion share sale to fund AI investments.

■South Korea's Samsung Electronics slumped 8% as its massive $80 billion shareholder return plan fell short of market expectations.

■Consequently, South Korea's Kospi index plunged 2.9%, while Hong Kong's Hang Seng fell 2%.

Turkish Central Bank Restarts Weekly Repos

While Borsa Istanbul's BIST 100 index entered the week at 14,514.82 points, the Central Bank of the Republic of Türkiye (CBRT) introduced a pivotal liquidity management step.

■CBRT announced it will resume one-week repo auctions, which had been suspended since March 1, 2026.

■The USD/TRY exchange rate ticked up 0.1% to trade at 48.0790 in early interbank trading.

■Analysts point to 14,400 and 14,300 as key support levels for the BIST 100, while 14,600 and 14,700 act as immediate resistance.

Algorithmic trading desks (HFTs) and swap markets are pricing in Fed policy uncertainty in a strict "wait-and-see" pattern ahead of Jackson Hole. However, the 2-3 bps easing in Treasury yields indicates HFT positioning on short-duration bonds. The CBRT's decision to restart weekly repo auctions is a strategic liquidity management tool to address tight funding conditions. Expect high option implied volatility (VIX) in tech stocks ahead of Nvidia's make-or-break earnings. — Seda Çetin