Turkey Wake-up call: Macro, Political and Equity News, 4th August

BIST retreated 0.76% on half-day trading on Thursday before the start of the 4.5-day Eid break. Benchmark BIST100 attempted to climb higher in the early part of the Thursday session and touched 1,137 in initial trades. But the gains could not be sustained and the index turned south to a negative close as the pressure on lira seemed to sour the sentiment. Banks were down 0.95% on average with YKBNK and AKBNK underperforming. EREGL, KCHOL, SAHOL, TTKOM, KOZAL, and THYAO were among the weakest of non-financials while ARCLK, TKFEN, MGROS, TTRAK, GUBRF, HEKTS, DOHOL, and TATGD topped the gainers. Coming to first trading day of the month, our key macro agenda item will be the July'20 inflation numbers due at 10AM local time. Bloomberg consensus CPI at +0.80%. Meanwhile, consumer prices in metropolitan Istanbul climbed 0.44% in July (vs +0.04% same month last year) according to the Cost of Living Index compiled by the city's Chamber of Commerce, expanding the annual inflation to 13.41% from previous month's 12.97%. Separately, July'20 PMI will also be announced at 10AM. No consensus available. The index had jumped 31.8% on a sequential basis to 53.9 in June in its first print above the no-change mark since February thanks to a return to near-normality amid the lifting of COVID-19 restrictions. BIST is off to a gap higher open given the gains in international markets during our holiday. U.S. futures are almost unchanged this morning, but we note the 0.5-1.1% gains in major indices while we were closed. Asian markets are adding to their recent gains on strong U.S. manufacturing data and the rally in tech stocks.