Turkish markets rise as court delays hearing that could oust opposition leader

A Turkish court on Monday postponed a hearing in a case that could strip the leader of the main opposition Republican People's Party (CHP) of his post by potentially annulling a 2023 congress where he was elected - a move that helped lift markets.

The initial hearing was scheduled for Monday. The court set the next session for Sept. 8.

Removing Ozgur Ozel as leader of the CHP would mark the latest judicial blow to President Tayyip Erdogan's opponents. He is seen as a potential challenger in future elections, especially after Istanbul Mayor Ekrem Imamoglu — the party's 2023 presidential candidate — was jailed in March.

The lawsuit, filed by a CHP member, seeks to annul the results of the party's 38th Ordinary Congress in November 2023, citing procedural irregularities. At that congress, Ozel replaced long-time leader Kemal Kilicdaroglu, who lost to Erdogan in that year's presidential race.

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ALB Yatirim Chief Economist Filiz Eryilmaz said the court's decision to delay the case was the main driver behind Monday's market rally.

"The key point is that markets had feared a negative outcome, but that didn't materialize. A rate cut was already anticipated, but political uncertainty had delayed it. Now that those concerns are temporarily lifted, the path to a rate cut is no longer obstructed," she said.

The lira traded at 39.7785 against the U.S. dollar at 1117 GMT, compared with Friday's close of 39.88.

Istanbul's benchmark BIST 100 index was up 5.4% at 1117 GMT, having risen as much as 2.7% following the court decision. The banking index was up 9.43% at the same time, after an earlier jump of 3.7%.

Eryilmaz said markets are now fully pricing in a rate cut in July, helped by the postponement of the CHP case, which clarified the political and economic calendar. She added that expectations include June inflation coming in below forecast and a 350 basis point rate cut next month.

Mustafa Kemal Eski of Marbas Menkul Degerler also attributed the rally to the court’s delay, saying it eased political uncertainty.