Global markets witnessed a negative trend due to escalating tensions in the Middle East. Iran’s missile attack targeting Israel heightened concerns about the expansion of the war. While oil prices increased by over 3%, sales deepened in global stock markets. Demand for safe haven assets surged. Yesterday, the rapidly rising price of gold traded near its peak today. Shares of companies operating in the arms industry also showed positive divergence. Uncertainties regarding the situation in the Middle East and whether combatting inflation globally will result in a recession continue to dampen risk appetite. Yesterday, the Iranian Revolutionary Guard Corps announced that they had initiated a ballistic missile attack on Israel. Tensions remain high in the region following threats of retaliation from Israel and statements implying a stronger reaction if responded to by Iran. SIGNS OF CONTRACTION IN THE US INDUSTRY On the other hand, data released yesterday showed that job openings in the US, as indicated by the JOLTS report, increased to 8.04 million in August, exceeding market expectations. Analysts pointed out that this data has fueled concerns about a cooling off in the labor market beyond expectations, with the employment data to be released on Friday continuing to remain in investors’ focus. Contrary to expectations of an increase in August, construction spending in the country decreased by 0.1% to $2.132 trillion. The Institute for Supply Management’s (ISM) Purchasing Managers’ Index (PMI) for the manufacturing industry fell below market expectations to 47.2 in September. S&P Global’s manufacturing PMI data was upwardly revised to 47.3. The indices indicated a continued contraction in the country’s manufacturing sector. STOCKS OF WEAPONS COMPANIES POSITIVE The escalation of tension in the Middle East positively impacted the shares of some defense and energy companies, while fears that bookings may suffer due to conflicts led to a decline in cruise line stocks. Shares of US defense company Lockheed Martin, the lead contractor for the F-35 fighter jet, rose by nearly 4%, and shares of Northrop Grumman gained over 3%. Shares of RTX, the producer of the Patriot missile system, rose by approximately 3%, while General Dynamics shares went up by 1%. Conversely, shares of Carnival, Norwegian Cruise Line, and Royal Caribbean Cruises fell by 2.5%, 3%, and 2.3% respectively. EXPECTATIONS OF INTEREST RATE CUT Expectations of a 75 basis point rate cut by the Federal Reserve by the end of the year in the pricing of money markets continue to stay strong, with a 25 basis point rate cut likely in November. The US 10-year bond yield currently stands at 3.75%, and the dollar index began the day at 101.2. Following the increase in geopolitical risks, the price of gold per ounce rose by 1.1% yesterday and is currently trading at $2,656, 0.3% below the previous close. OIL PRICES RISE Following a 3.4% increase in the price of a barrel of Brent crude oil due to tension in the Middle East yesterday, it is currently trading at $74.5, 0.3% above the previous close. Yesterday, the Dow Jones index decreased by 0.41%, the S&P 500 index by 0.93%, and the Nasdaq index by 1.53%. Futures contracts for indices in the US also started the day with a negative trend. SELLING PRESSURE IN EUROPEAN STOCK MARKETS Apart from the UK, European stock markets saw a selling trend due to increased concerns about conflicts in the Middle East yesterday. The banking index in Europe led the losses with a 2.84% decline. While technology companies’ shares fell by an average of 0.65%, automotive companies’ shares lost 1.17% in value. On the macroeconomic data front, declining energy prices led to a drop in inflation rates to the lowest level in the Eurozone in the last three years in September. Compared to the same month last year, the average increase in prices of goods and services in the region was only 1.8%. Annual inflation in the Eurozone fell below the 2% target seen as ideal by the European Central Bank (ECB) for the first time in over three years. Additionally, while the manufacturing Purchasing Managers’ Index (PMI) in the Eurozone fell by 0.8 points to 45 points in September, Germany’s manufacturing PMI remained weak at 40.6, exceeding expectations. In the UK, the manufacturing sector PMI held steady at 51.5 in September, in line with expectations, while business confidence hit the lowest level in nine months. Analysts stated that the signals from this data have increased expectations that the ECB will continue to ease monetary policy and will lower the policy interest rate again in October. Yesterday, the DAX 40 index in Germany declined by 0.58%, the CAC 40 index in France by 0.81%, and the FTSE MIB index in Italy by 1.04%, while the FTSE 100 index in the UK rose by 0.48%. Futures contracts for European indices began the day with a mixed trend. NEGATIVE TONE IN ASIAN MARKETS Except for Hong Kong, a negative trend dominated the Asian markets on the new trading day, with trading suspended in China due to a holiday. Despite the dampening of risk appetite in Asian markets due to escalating tensions in the Middle East, Hong Kong continued to trade positively due to the economic stimulus packages announced by China. Moreover, yesterday, Ishiba Shigeru, the new leader of Japan’s ruling Liberal Democratic Party (LDP), was elected as the country’s Prime Minister during an extraordinary session of the House of Representatives. Ishiba is expected to remain in office until early general elections planned for October 27. According to data released today, the consumer confidence index for September in Japan fell below expectations to 36.9. While the dollar/yen pair closed yesterday at 143.57 with a 0.1% decrease, it is currently trading at 143.9, up by 0.2%. The Nikkei 225 index fell by 1.8% in Japan near the close, while the Kospi index declined by 0.6% in South Korea and the Hang Seng index rose by 5.8% in Hong Kong. SHARP DECLINE IN BORSA ISTANBUL Borsa Istanbul, which followed a selling trend yesterday, ended the day with a 3.25% decrease in the BIST 100 index, closing at 9,351.22 points from the previous close. The dollar/Turkish lira exchange rate closed flat at 34.1978 yesterday, and today it is trading at 34.2080 at the opening of the interbank market. Analysts highlighted that today, foreign exchange assets and liabilities of firms outside the financial sector domestically, and unemployment rates in the Eurozone and ADP Private Sector Employment data in the USA internationally, will be monitored. They note that the BIST 100 index has support at 9,300 and 9,200 points, with resistance at 9,500 and 9,600 levels.