Turkey Wake-up call: Macro, Political and Equity News, 1st June

BIST added 0.79% yesterday after a day entirely spent in positive territory despite the profit-taking seen among the European peers. Banks outperformed with the 1.78% gain in their sector index as ISCTR and TSKB led the pack. TUPRS, EKGYO, TTKOM, ZOREN, CIMSA, HEKTS, OYAKC, and AKSEN topped the non-bank gainers in the BIST100 universe while EREGL, BIMAS, TOASO, CCOLA, KARSN, GLYHO, and SELEC stood out among the fewer decliners. Today, our local macro agenda involves May'22 PMI that will be announced at 10AM local time. The index had softened 0.4% on a sequential basis to 49.2 in March in its second consecutive print below the 50 no-change mark after a ten-month expansion streak. Separately, Istanbul Chamber of Commerce will reveal its May'22 inflation numbers for metropolitan Istanbul at noon local time. On the political front, President Erdogan will address his party group meeting in the Parliament starting at 12PM. We will also eye developments in the Istanbul court hearing which is expected to reach a verdict in the case vs Istanbul mayor Ekrem Imamoglu on charges that he allegedly insulted the judges of Turkey's election board YSK. If convicted, Imamoglu faces between one and four years in jail and may also be removed from his post, after which the AK Party-dominated city council will elect a replacement. We anticipate a sideways open for the BIST given mixed signals from abroad and the stable lira. U.S. futures are up a few points in early trades while Asian bourses are moving in different directions.