Yesterday, President of Ukraine Zelensky made statements by connecting to the EU meeting via video conference. Later, he announced that he had officially signed the certificate of participation. The fact that there was no positive news from the ceasefire talks between Russia and Ukraine in Minsk, the capital of Belarus, yesterday’s opening of Zelenskiy and the demands of the parties at the armistice table made it difficult to reach a possible agreement, and the violence of the war also increased. Let’s note that the talks will continue today, as the hopes for negotiations are dwindling.
In the face of the developments, we witnessed that oil prices went crazy yesterday. The price of North Sea Brent crude oil per barrel increased by 13% from $98 in the last day to $111 this morning. We believe that the perception of geopolitical risk and the fear of breaking the supply chain, which has escalated due to the ongoing war, are behind the oil prices, which have risen to the highest level in the last 8 years. Likewise, among Russia’s export items, energy constitutes almost more than half of its total exports.
On the day when the oil rocketed, the International Energy Agency (IEA) decided to release 60 million barrels of oil kept in warehouses at its ministerial meeting. Of course, although the figure may seem large, it did not even have a downside effect on oil prices on a day when geopolitical risks were at its peak.
After the pandemic, in the face of inflation, which struggled with the inflation problem and rose to its multi-year peak in many countries, the fact that oil fueled the fire will affect the current account deficit and inflation of energy importing countries more negatively, and even higher price levels will bring the risk of stagflation to the agenda. we think.
It is getting harder and harder to think about how the FED will start to get stuck between inflation and stagflation risk, and how it will raise interest rates by 25 basis points every month in this delicate environment. As a matter of fact, Rehn, speaking from the front of the European Central Bank yesterday, said that the ECB should not ignore the war situation and argued that the incentives should continue, and the possibility of an expected interest rate hike from the ECB was postponed.
Yesterday, the European stock markets ended the day with serious losses, as the weather quickly turned to the negative side. Understanding that geopolitical risks will not be resolved anytime soon, even according to the news we read, NATO Secretary General Stoltenberg said that for the first time in history, an intervention force was deployed and more than 100 jets at 30 different points and 120 ships from the Baltic to the Mediterranean were on high alert. We also see that he openly warned Russia by saying, “Don’t let this happen.”
Unfortunately, the Turkish economy, caught unprepared for the negative weather, is seeing that the defense shield is getting thinner day by day. With a rough calculation of the impact that rising energy prices will inflict on Turkey’s energy bill, we know that every $10 increase incurs an additional $4 billion cost in the current account balance. Let’s underline once again that oil has increased by 45 dollars in the last 2 months. In addition, the events in Russia and Ukraine, which are the main tourism corridors, are also worried that the tourism revenues on which the new economy model depends will be dealt a major blow.
Even though oil is on the agenda, we saw that gold prices, which were in demand in a safe harbor manner during the periods when the perception of geopolitical risk increased, turned their direction upwards again yesterday. We argued that we do not believe the levels that gold has reached, and that the direction should be up, by conveying to our newsletter that the price of an ounce of gold, which rose to the level of $ 1,974 on Thursday, when the war broke out, decreased by almost $ 100 on Friday, and that a person who is unaware of the news flow can even conclude that the war is over just by looking at the gold prices. . With the pessimistic weather again this morning, the ounce price of gold rose to the level of $ 1,945. Technically speaking, we think that gold will set its sights higher on closes above $1,965 – $1,974.
After the swift ban on some Russian banks, Bitcoin rose to an all-time high against the Russian Ruble yesterday, while the 5-year CDS risk premium, which shows Russia’s risks in foreign currency, exceeded the level of 1,500, testing unprecedented levels. Basically and technically, we expect the rise in Bitcoin to continue. The key to the uptrend will be opened by exceeding the $45,000 level.
In a time when the world was upside down, the USDTRY rate almost jumped by leaving its ‘horizontal course’ of 13.60 to a horizontal course of 13.80 in the last days. Behind the calm appearance of the exchange rate, it is accepted by all market actors that there is ongoing support from the public. However, we cannot predict how much more ‘sustainable’ the desire to keep the dry in a narrow band will be. Technically speaking, although we will pay attention to above the 13.90 level, we generally see the risks on the upside.
While the US stock markets closed the night with a decrease of around 1.7% due to the negative weather yesterday, the weather in Asian markets is also negative this morning. The benchmark index is trading at 1.8% on the Tokyo stock market. Let’s note that there has been a small increase in the futures transactions of the US stock markets.
In today’s data calendar, we will track the assets and liabilities of companies in Turkey, excluding the financial sector. On the outside, ADP private sector employment can be tracked today, ahead of the official US employment report released on the first Friday of every month. Tomorrow, eyes will be on official inflation data in Turkey (polls show that CPI will increase by 4% monthly and 54% annually).