Turkey Wake-up call: Macro, Political and Equity News, 12th July

BIST gained 0.39% on Friday and managed to eke out a 0.12% gain for the whole week amid lacklustre trading. After an uptick open on Friday, BIST100 index rebounded twice from the 1,372 level and spent most of the day in positive ground. Banks slightly underperformed with the 0.01% drop for their sector index. Steelmakers, PETKM, BIMAS, TUPRS, CIMSA, DEVA, and KARSN topped the non-bank gainers while ENKAI, TRGYO, LOGO, DOHOL, ZOREN, and AKSA were some of the weaker names. Today, our local macro agenda highlight will be the unemployment statistics for May'21 to be released at 10AM local time. Seasonally-adjusted unemployment had climbed 0.9pp from a month ago to a 9-month peak of 13.9% in April due to a combination of the 83k increase in labour force (labour force participation sequentially up 0.1pp to 51.3%) along with the 193k monthly decline in the number of employed. Separately, TurkStat will release the residential sales data for June’21 also at 10AM. Home sales had increased 16.2% yoy to 59k units in May as the base effect from last year's first coronavirus lockdowns continued to be partially in play while rising interest rates led to a 42.9% yoy drop in mortgage-backed transactions. Lastly, Treasury will reissue 2-year fixed-rate bonds in its single domestic borrowing auction today. Will hold four more auctions/direct sales during the next two days ahead of this week's hefty TL24.69bn redemption. BIST seems off to a sideways start with a positive bias given continued optimism in Asian markets following the new peaks in U.S. indices. S&P futures are down 0.15% in early trades in partial reversal of their 0.2-0.3% overnight gains after we left on Friday. Lira is a tad weaker with the USDTRY pair around 8.67 levels vs 8.6545 at Friday's closing bell.