Turkey suicide bombing weighs on lira, bourse

A pair of shoes, belonging to a street vendor who was selling Turkish traditional bagel or simit, is placed at the bombing scene during a commemoration for the victims of Saturday's bomb blasts, in Ankara, Turkey, October 12, 2015. (Reuters)

Oct. 12 Turkish stocks and the lira fell on Monday and debt insurance costs rose as a blast that killed up to 128 people over the weekend raised fears of further pre-election turmoil, though many other emerging assets extended their recent gains.

The double suicide bombing at a rally of pro-Kurdish and labour activists in Ankara is likely to exacerbate divisions between supporters of Turkey's ruling AK Party and Kurdish groups before a Nov. 1 vote.

The lira weakened 0.6 percent against the dollar, after hitting an eight-week high last week, while Istanbul stocks slipped 0.4 percent. Data from Markit showed five-year credit default swaps rose 9 basis points to 275 basis points.

"Negativity around Turkey is likely to increase further," said Salman Ahmed, global fixed income strategist at Lombard Odier. "Indeed, increased chances of another hung parliament in the coming elections is another source of negativity for the country, which is already reeling from financing and external vulnerability concerns."

Elsewhere however the mood appeared more buoyant, with emerging equities rising 0.75 percent to two-month highs as markets grow increasingly convinced the U.S. Federal Reserve will not raise interest rates until 2016.

That has caused investors to unwind some long dollar positions, with latest data from the Commodity Futures Trading Commission showing speculators had pared back bullish bets on the greenback in the week until Oct. 6.

China's central bank added to the cheer, taking fresh steps to inject liquidity into the struggling economy and saying the stock market's correction "is almost over".

Chinese mainland shares jumped 3 percent after the move and Hong Kong markets firmed 0.7 percent while the yuan firmed nearly 0.4 percent, set for its strongest one-day performance since March.

Meanwhile rising oil prices and a slipping dollar index lent Russia dollar-denominated stocks and its currency a helping hand with the rouble strengthening more than 1 percent against the greenback to hover close to the Friday's 10-week peak.

South Africa's rand also gained against the dollar.

Central and eastern European markets were more mixed. Poland's zloty slipped 0.3 percent against the euro and the Warsaw bourse sank 0.6 percent as emerging Europe's largest economy gears up for national elections on Oct. 25.

Polls point to a win by the opposition populist Law and Justice (PiS) party, but Finance Minister Mateusz Szczurek warned their plans were dangerous to public finances and that zloty volatility would be unavoidable in the run up to the poll.

Hungary's forint however gained 0.14 percent, while other currencies across the region were treading water.

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Last Update: Wednesday, 20 May 2020 KSA 09:45 - GMT 06:45
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