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Global markets began the week in recovery mode, supported by signs of progress toward a new Middle East agreement, softer US bond yields and stronger-than-expected Chinese economic data. US index futures opened the week higher after a weak Friday session.

Investors are turning their attention to major US corporate earnings this week, including results from Meta and Tesla, while central bank policy decisions are expected to dominate the following week.

US equities and Treasuries stabilize after weekly selloff

Risk appetite, which had weakened the previous week on accelerating inflation in the United States, geopolitical risk in the Middle East and doubts over the sustainability of artificial intelligence companies' spending, edged higher as the new week opened. After last week's sharp declines in AI-related shares, markets shifted toward finding a balance.

Positive expectations for major US corporate earnings due this week and a decline in Treasury yields gave markets room to breathe. US index futures started the week in positive territory. On Friday, the S&P 500 fell 1.09%, the Nasdaq lost 2.15% and the Dow Jones declined 0.34% on the New York Stock Exchange.

The US 10-year Treasury yield, which had slipped to 5.09% last week as investors sought safety during the technology sell-off, opened the week lower again and stood at about 5.07%. The dollar index, supported by expectations that the Federal Reserve will keep rates steady at its meeting next week, began the week down 0.1% at 101.7. Gold traded at $4,183 per ounce, up 0.4%, helped by the retreat in yields and the weaker dollar.

Analysts said there is no market-moving US data this week, but that policy decisions from the Fed and other global central banks next week will be watched closely. Money market pricing still points to the Fed holding its policy rate steady at next week's meeting, with a 25 basis point increase in December seen as almost certain under current pricing.

Middle East diplomacy and oil prices

Efforts to find the ground for a new agreement in the Middle East added to the optimistic tone. Iranian Foreign Minister Abbas Araghchi said the country was prepared for a new attack but repeated that it was also ready for diplomacy.

Araghchi recalled that Iran had presented its seven-stage, seven-day plan in New York. "The US side conveyed its views on the seven-day plan and we are reviewing them. Iran's plan is still on the table," Araghchi said.

Oil prices pulled back on the diplomatic signals. Brent crude for December delivery started the week down 1.9% at $107.8 per barrel.

US President Donald Trump, meanwhile, claimed that "great progress" had been made in peace talks between Russia and Ukraine. Trump criticized Ukrainian President Volodymyr Zelenskiy for targeting Russian diesel refineries, which he said were seriously damaging global diesel markets, and accused Zelenskiy of not wanting to end the war.

Meta and Tesla are due to report financial results on Wednesday. Preliminary sectoral purchasing managers' index data for October are also expected around the world this week.

France unrest weighs on European outlook

European stock markets closed Friday on a positive note, but events in France over the weekend grew large enough to threaten sentiment. Attempts by protesters to loot luxury stores and the participation of farmers in the unrest raised concerns about economic activity.

Analysts said the turmoil on French streets puts retail trade at risk and that targeting luxury consumption brands could weigh on the listed shares of those companies. With the farming sector joining the protests, analysts warned that agricultural output could fall and that food-driven inflation might accelerate. The damage caused by the events is also expected to add to public finances.

Sectoral PMI readings across the region this week should shed light on the state of economic activity. Statements from European Central Bank President Christine Lagarde at an event in Germany on Wednesday are also on the calendar.

On Friday, the FTSE 100 rose 0.38% in the UK, Italy's FTSE MIB 30 gained 0.93%, France's CAC 40 added 0.28% and Germany's DAX 40 climbed 0.95%. Index futures in Europe opened the week on the back foot.

China data ease growth worries

Asian stock markets were mostly higher, with Japan the exception, while Hong Kong markets were closed today for a holiday.

Data released in China today eased concerns about the economy. Gross domestic product grew 4.5% on an annual basis in the third quarter, beating expectations. The figures reduced the pressure on the country's economic management to deploy more aggressive stimulus in order to meet the annual growth target.

Retail sales rose 1.1% in September, above forecasts, while industrial production increased 5.5% in the same month, pointing to a faster pace of activity in the industrial sector compared with the previous month.

Japan's Nikkei 225 declined after Prime Minister Sanae Takaichi said the government was not responsible for rising interest rates caused by the weakening of the yen. Near the close, the Nikkei 225 was down 0.7%, South Korea's Kospi was up 0.8% and China's Shanghai Composite had gained 0.7%.

Borsa Istanbul awaits central bank decision

The BIST 100 index on Borsa Istanbul closed Friday at 11,721.72 points, down 2.89% in a session dominated by selling. The October futures contract on the BIST 30 index in the derivatives market fell 0.74% in the evening session compared with the regular session close.

The dollar/TL pair ended Friday at 49.1280 and traded at 49.1600 at today's interbank opening, slightly above the previous close.

Domestic attention this week is on the Central Bank of the Republic of Turkey's interest rate decision on Thursday. Economists surveyed by AA Finance expect the bank to cut its policy rate by 100 basis points to 36% in October.

Analysts said short-term external debt statistics are on the domestic agenda today while the overseas data calendar is light. On the charts, they put support for the BIST 100 at 11,600 and 11,500 points and resistance at 11,900 and 12,000 points.

Key takeaways

• US index futures started the week higher as bond yields fell and expectations for major corporate earnings improved.
• Iran's foreign minister said Tehran's seven-stage, seven-day plan is still on the table, sending Brent crude down 1.9% to $107.8 per barrel.
• China's economy grew 4.5% year-on-year in the third quarter, beating expectations alongside stronger retail sales and industrial output.
• Economists surveyed by AA Finance expect Turkey's central bank to cut its policy rate by 100 basis points to 36% on Thursday.