Turkey Hikes Interest Rates

News Event

From Trading Economics: The Central Bank of Turkey raised its benchmark one-week repo rate by a higher-than-expected 50bps to 8 percent on November 24th and its overnight lending rate by 25 bps to 8.5 percent, while it held its borrowing rate at 7.25 percent. It was the first policy tightening since January 2014, after the lira fell to a record low amid a slowdown in economic activity. The lira has already lost around 14 percent of its value against the dollar this year on stronger dollar and concerns over the aftermath of July's failed coup. Inflation was last recorded at 7.2 percent in October, well above central bank's 5 percent target. Interest Rate in Turkey averaged 59.54 percent from 1990 until 2016, reaching an all time high of 500 percent in March of 1994 and a record low of 4.50 percent in May of 2013.

Market Opening Wrap

In Asian Equity Markets Japan's Nikkei index rose for a sixth day on Thursday helped by hopes for better exporters' earnings as the dollar jumped against the yen.  The Nikkei ended 0.9 percent higher at 18,333.41, extending its gains into a sixth day to post its longest winning streak since mid-July. The Topix gained 0.9 percent to 1,459.96 and the JPX-Nikkei Index 400 advanced 0.9 percent to 13,105.50. MSCI's broadest index of Asia-Pacific stocks outside Japan pared Wednesday's gains and lost 0.4 percent as focus returned to the United States. Hong Kong's Hang Seng shed 0.2 percent while higher metals prices lifted China's blue-chip CSI300 index 0.4 percent. South Korea's Kospi fell 0.7 percent amid receding foreign investor appetite.

In Currency Markets the dollar firmed in Asian trading on Thursday after data suggesting a pickup in U.S. economic growth early in the fourth quarter increased chances of the Federal Reserve raising interest rates. The dollar was up 0.2 percent at 112.74 yen after rising as high as 112.98 yen on Wednesday, its loftiest peak since March. The euro shrugged off an upbeat reading on business activity and fell 0.1 percent to $1.0543, wallowing not far from its low of $1.0525, which was its lowest since December 2015. The Australian dollar eased 0.08 percent to $0.7378. Kiwi fell 0.16 percent to trade at $0.6995, off a four-month low of $0.6972 hit overnight. The dollar index was up 0.13 percent at 101.86.

In Commodities Markets oil prices were little changed on Thursday as uncertainty ahead of a planned OPEC-led crude production cut and thin liquidity during the U.S. Thanksgiving holiday kept traders from making big new bets. Brent crude futures were trading at $49.01, up 6 cents from their last close. U.S. West Texas Intermediate crude was at $48.07 per barrel, up 11 cents from their last settlement. Gold prices fell on Thursday as the dollar strengthened on growing expectations of a Fed rate hike in December following positive U.S. economic data. Spot gold was down 0.2 percent at $1,185.55 an ounce. Spot silver fell 0.6 percent to $16.26 an ounce. Platinum fell over 1.3 percent to $918.40, while palladium edged up 0.2 percent to $734.40.

In US Equity Markets the Dow and the S&P 500 eked out record high closes on Wednesday ahead of the Thanksgiving holiday, helped by gains in industrial stocks, though losses in technology shares limited the advance and weighed on the Nasdaq. The Dow Jones industrial average rose 0.31 percent, to end at 19,083.18, while the S&P 500 gained 0.08 percent, to 2,204.72 and the Nasdaq Composite fell 0.11 percent, to 5,380.68. The S&P 500 technology index fell 0.5 percent on Wednesday, with HP Inc falling 6.8 percent, a day after it reported disappointing results. Eli Lilly fell 10.5 percent after the company said it would stop developing its Alzheimer's drug following a trial failure. Biogen, which is developing a similar drug, fell 3.8 percent.

In Bond Markets Japanese Government bonds sagged on Thursday, with the 20- and 30-year bond yields hitting eight-month highs, following a retreat in U.S. Treasuries and on caution ahead of a 40-year JGB auction. Long-dated JGBs came under pressure as a sell-off in U.S. Treasuries showed no sign of abating, with the 10-year U.S. yield hitting a 16-month high. The 30-year JGB yield rose to 0.650 percent, its highest level since mid-March. The 20-year yield edged up to 0.500 percent, also an eight-month high. The two-year yield fell 0.5 basis point to minus 0.170 percent while the five-year yield rose 0.5 basis point to minus 0.090 percent

Source: Institute of Trading and Portfolio Management