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Turkish Stocks Enjoy World’s Biggest Rally on Fading Iran Fears

(Bloomberg) –Turkish stocks rose the most among all major equity markets worldwide on Thursday as investors’ concerns over a possible escalation in tensions between the U.S. and Iran waned, sparking a sharp relief rally across the Middle East.

The Borsa Istanbul 100 Index soared as much as 4.7%, the most among 94 major global equity gauges tracked by Bloomberg. Thursday’s jump was the biggest increase for the Istanbul benchmark since November 2015.

Elsewhere in the region, Saudi Arabia’s Tadawul All Share Index climbed 2.7%, the most since October, with Saudi Aramco rising 2.3%, up for the first time in five days. Indexes in Dubai, Abu Dhabi, Bahrain, Kuwait, Oman, Qatar and Egypt also gained ground, up between 0.8% and 1.9%.

The prospect of an open war in the Gulf region dissipated after U.S. President Donald Trump downplayed the impact of missile attacks on American military facilities in Iraq. Shifting away from threats to strike back at Iran, Trump instead called for new sanctions, calming traders and offering the chance to extend the rally that started on Tuesday.

A further escalation in the regional tensions “would have had dire effects on Turkey,” said Mohammed Ali Yasin, the chief strategy officer at Al Dhabi Capital Ltd. in Abu Dhabi, adding that the Turkish market is also benefiting from Wednesday’s sharp drop in crude prices. “For an industrial country like Turkey, that imports its oil, the inflationary pressures would be reduced.”

The rally in the country’s equities also got a boost from the 2020 guidances published by some of its largest lenders this week, which traders said were strong. Turkiye Garanti Bankasi AS’s and Akbank TAS’s shares led the surge on the Istanbul bourse on Thursday, with gains of 7.4% and 7%, respectively.

“Fading Iran-U.S. worries, risk-on mood, the retreat in oil prices, coupled with strong 2020 guidance from banks are making Turkish equities the winners,” said Muge Koen, a trader at BGC Partners Securities in Istanbul.

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