Türkiye’s five-year credit default swap (CDS) risk premiums dropped, shares rose led by banking and airline stocks and the lira was on track for a daily gain on Wednesday, as the two-week Middle East cease-fire sparked a relief rally across global markets.
The blue-chip Borsa Istanbul Stock Exchange BIST 100 index was up 5%, while the banking index rose 9%. The BIST 100 had fallen 1.45% on Tuesday.
Shares in national flag carrier Turkish Airlines were up 8% while airline Pegasus climbed 7%.
Shares in Turkish petrochemical companies Tüpraş and Petkim slid around 5% and 6% respectively, following strong drops in oil prices overnight.
The United States and Iran have agreed to a two-week ceasefire and Pakistan Prime Minister Shehbaz Sharif said in a post on the social media platform X that he had invited Iranian and U.S. delegations to meet in Islamabad on Friday.
The lira traded at 44.5125 against the dollar, strengthening from Tuesday's close of 44.6065.
Türkiye's five-year credit default swaps, a measure of risk, fell 31 basis points from the previous close to a near one-month low of 254 bps, according to S&P Global Market Intelligence data.
The CDS stood at 235 basis points before the U.S. and Israel attacked Iran at the end of February and rose to 327 basis points in March.
Before the two-week cease-fire agreement, economists had been expecting the Turkish central bank to reflect a cumulative 300 basis points of tightening delivered via liquidity measures in the main policy rate, which stands at 37%.
Markets are now watching whether the cease-fire evolves into a more permanent arrangement, which could reshape expectations for policy tightening at the central bank's next monetary policy committee meeting on April 22.
U.S. President Donald Trump said the talks mediated by Pakistan, just hours before the deadline he set for Iran, resulted positively.
Trump accepted Pakistan’s proposal, which includes reopening the Strait of Hormuz, saying that the bombing and attacks against Iran will be suspended for two weeks.
Trump had claimed the U.S. had completed its military objectives in Iran and was close to reaching a long-term peace deal. He said Washington received a 10-point proposal from Iran as a basis for negotiations.
The U.S. 10-Year Treasury yield fell 8 basis points to 4.24%, the two-year yield dropped 9 basis points to 3.73%, and the five-year yield fell 9 basis points to 3.86%.
Capital flows in emerging markets are expected to strengthen with the U.S. 10-Year Treasury bond yield declining, as it is one of the most critical indicators within the global financial system.
Global shares, from Asia to Europe, surged in Wednesday trading, as oil prices plunged below $100 a barrel on cautious optimism that the cease-fire could translate into lasting peace, although some analysts remain skeptical.
