Global stocks ease on shifting Fed expectations

NEW YORK -- World stock markets were mostly lower Monday amid worries about slowing global growth and diminishing hopes for an aggressive Federal Reserve interest rate cut.

Taking their cue from an earlier sell-off in Asia, European stock markets weakened as steep reductions in US borrowing costs appeared to be off the cards, at least for now.

Among the leading European indices, the blue-chip CAC 40 in Paris, the DAX 30 in Frankfurt and London's FTSE all ended the day in the red. 

On the other side of the Atlantic, Wall Street stocks also retreated for a second straight session.

US stocks have pulled back since all three indices closed at records on Wednesday following a cease-fire on new tariff actions in the US-China trade war and amid hopes for easier monetary policy. 

But the strong US jobs report Friday dented expectations of an aggressive move by the Fed to cut interest rates. 

All eyes now are on Fed Chair Jerome Powell who is set to make his semi-annual congressional appearances this week.

Investors also will keep an eye on consumer price data, another factor considered by the Fed.

But Morgan Stanley warned that stocks were vulnerable even if the Fed cuts interest rates, and lowered its rating on equities to "underweight," based on an assessment of the pluses and minuses of move by the central bank.

"Our concern is that the positives of easier policy will be offset by the negatives of weaker growth," Morgan Stanley said in a note.

"We think a repeated lesson for stocks over the last 30 years has been that when easier policy collides with weaker growth, the latter usually matters more for returns."

TURKISH LIRA PRESSURED

While the dollar was steady against its main rivals, it surged against the Turkish lira after President Recep Tayyip Erdogan sacked the head of the country's central bank following months of tensions over high borrowing costs.

Erdogan, who is battling to boost Turkey's struggling economy, has repeatedly railed against high interest rates and called for them to be lowered to stimulate growth.

"The Turkish lira is sliding once again amid renewed concerns that Erdogan is ruining the nation's economy, just as inflation was starting to ease back," said Forex.com analyst Fawad Nazagzada.

"His decision to replace the Turkish central bank governor over the weekend has backfired with the lira taking a tumble. Undoubtedly, some investors are concerned that monetary policy will now be loosened prematurely, and this could prevent a convincing drop in inflation."

Among individual companies on Wall Street, Apple fell 2.1 after Rosenblatt Securities downgraded shares in part due to expected weakness in iPhone sales.

Boeing shed 1.3 percent after Saudi budget carrier flyadeal withdrew an order for the grounded 737 MAX jets in favor of a fleet entirely composed of Airbus planes. 

US shares of Deutsche Bank slid 6.1 percent after the German bank announced it would cut 18,000 jobs by 2022, around one-fifth of the workforce. Shares fell 5.4 percent in Frankfurt.

KEY FIGURES AROUND 2040 GMT (4:40 a.m. Tuesday in Manila)

New York - Dow: DOWN 0.4 percent at 26,806.14 (close)

New York - S&P 500: DOWN 0.5 percent at 2,975.95 (close)

New York - Nasdaq: DOWN 0.8 percent at 8,098.38 (close)

London - FTSE 100: DOWN 0.1 percent at 7,549.27 (close)

Paris - CAC 40: DOWN 0.1 percent at 5,589.19 (close)

Frankfurt - DAX 30: DOWN 0.2 percent at 12,543.51 (close)

EURO STOXX 50: DOWN 0.1 percent at 3,523.76 (close)

Tokyo - Nikkei 225: DOWN 1.0 percent at 21,534.35 (close)

Hong Kong - Hang Seng: DOWN 1.5 percent at 28,331.69 (close)

Shanghai - Composite: DOWN 2.6 percent at 2,933.36 (close)

Euro/dollar: DOWN at $1.1211 from $1.1225 at 2100 GMT Friday

Dollar/yen: UP at 108.75 yen from 108.47 yen

Pound/dollar: DOWN at $1.2512 from $1.2521

Brent North Sea crude: DOWN 12 cents at $64.11 per barrel

West Texas Intermediate: UP 15 cents at $57.66 per barrel

source: news.abs-cbn.com

Global stocks mixed on tepid US inflation, trade talk hopes

NEW YORK -- Global stocks were mixed on Thursday, with Wall Street equities gaining after a tepid inflation report and the latest conciliatory move between the US and China on trade.

Analysts also said sentiment was boosted by a Turkish decision to hike interest rates, which boosted the Turkish currency.

"In the end, it wasn't the fairly uninteresting updates from the Bank of England or the ECB, nor a much-needed, and huge, rise in interest rates from the Central Bank of Turkey, that got the markets moving this Thursday but rather a disappointing inflation reading from the US," said Spreadex analyst Connor Campbell.

US consumer price inflation slid to 2.7 percent on an annual basis in August, from 2.9 percent in July, removing one source of pressure that could push the Federal Reserve to raise interest rates faster than the gradual pace it has indicated.

Among major US indices, the tech-rich Nasdaq led the way with a 0.8 percent gain that included a handsome 2.4 percent gain for Apple a day after it unveiled new iPhone models.

Earlier, markets in Asia started off a rally after the United States reached out to China for fresh talks in a bid to avert a trade war, providing some much-needed respite to weary investors.

News that Treasury Secretary Steven Mnuchin had invited top Chinese officials for talks came just under a week after Donald Trump threatened to impose tariffs on all $500 billion worth of imports from China.

China's commerce ministry on Thursday welcomed the offer and said the two sides were discussing details.

Hong Kong's Hang Seng Index jumped 2.5 percent, having fallen for six straight days and into a bear market, which is a 20 percent drop from its January record high.

Most other markets in the region followed it higher.

In Europe, London ended the day down 0.4 percent, penalized by a stronger pound which hurts companies which do most of their business globally and convert profits back into sterling.

The European Central Bank indicated it planned to continue reducing its asset purchases, which helped the euro rise against the dollar. 

Frankfurt's DAX 30 managed to remain in the green but the CAC 40 in Paris slid into the red just before the closing bell.

TURKISH DELIGHT

The biggest surprise on Thursday came from Turkey's central bank, which announced a massive rate hike to battle soaring inflation and boost the lira, prompting the embattled currency to surge in value.

The central bank hiked the one week repo auction rate 625 basis points from 17.75 percent to 24 percent, significantly higher than the Bloomberg consensus of 21 percent.

The lira reacted strongly to the decision, rising by five percent in value to 6.0 lira to the US dollar. It later shed some of those gains but was still up over 4.1 percent in value at 6.08 to the dollar.

Crude oil prices tumbled as Hurricane Florence weakened on its approach towards the US east coast, reducing the risk of damage and disruption to oil installations.

Traders also focused on the International Energy Agency announcement that global oil output hit a record of 100 million barrels per day in August, providing some relief from concerns about supplies as exports from Iran and Venezuela decline.

KEY FIGURES AROUND 2100 GMT (5 A.M. FRIDAY IN MANILA)

New York - Dow Jones: UP 0.6 percent at 26,145.99 (close)

New York - S&P 500: UP 0.5 percent at 2,904.18 (close)

New York - Nasdaq: UP 0.8 percent at 8,013.71 (close)

London - FTSE 100: DOWN 0.4 percent at 7,281.57 (close)

Frankfurt - DAX 30: UP 0.2 percent at 12,055.55 (close)

Paris - CAC 40: DOWN 0.1 percent at 5,328.12 (close)

EURO STOXX 50: UP 0.2 percent at 3,333.68 (close)

Tokyo - Nikkei 225: UP 1.0 percent at 22,821.32 (close)

Hong Kong - Hang Seng: UP 2.5 percent at 27,014.49 (close)

Shanghai - Composite: UP 1.2 percent at 2,686.58 (close)

Euro/dollar: UP at $1.1689 from $1.1626 at 2100 GMT

Pound/dollar: UP at $1.3105 from $1.3045

Dollar/yen: UP at 111.94 yen from 111.26 yen

Oil - Brent Crude: DOWN $1.56 at $78.18 per barrel

Oil - West Texas Intermediate: DOWN $1.78 at $68.59 per barrel

source: news.abs-cbn.com

Turkey slaps retaliatory tariff hikes on key US products

ISTANBUL - Turkey hiked Wednesday tariffs on imports of several key US products in retaliation for American sanctions against Ankara, as a bitter dispute between the two allies that has battered the Turkish lira showed no sign of ending.

The lira -- which lost just under a quarter of its value in trading on Friday and Monday -- however continued to claw back some ground on financial markets, rallying around five percent against the dollar.

But a court rejected an appeal for the release of American pastor Andrew Brunson -- whose detention for almost two years sparked the crisis -- leaving no immediate solution to the Turkey-US row in sight.

The lira's fall had raised fears Turkey was on the verge of a fully-fledged economic crisis, especially in its banking system, that could spill over into Europe and other markets.

Turkish Vice President Fuat Oktay said that the tariff hikes were ordered "within the framework of reciprocity in retaliation for the conscious attacks on our economy by the US administration".

President Donald Trump had previously announced that the United States was doubling steel and aluminium tariffs on Turkey.

The hikes were published in Turkey's Official Gazette in a decree signed by President Recep Tayyip Erdogan, who has repeatedly described the crisis as an "economic war" that Turkey will win.

The tariff increases amount to a doubling of the existing rate, the state-run Anadolu news agency said, in an apparent parallel response to Trump's move.

The decree said the move brought tariffs to 50 percent on imports of US rice, 140 percent on hard alcoholic drinks like spirits, 60 percent on leaf tobacco and 60 percent on cosmetics.

Trade Minister Ruhsar Pekcan said Turkey had doubled tariffs on 22 products imported from the United States, saying the tariffs were together worth an additional $533 million. 

Erdogan's spokesman Ibrahim Kalin added: "Turkey is not in favor of an economic war with anyone but when attacked ... will take all necessary steps."

Erdogan on Tuesday said Turkey would boycott US electronic goods like iPhones, even though he has himself been photographed repeatedly using the product himself.

He also made his now famous speech on the night of the July 2016 failed coup calling citizens out into the street through FaceTime, an iPhone app.

Moves by the central bank to ensure Turkish banks have liquidity and a planned conference call by Turkish Finance Minister Berat Albayrak, who is Erdogan's son-in-law, on Thursday have gone some way to giving reassurance to investors.

The lira was trading on Wednesday at 6.1 to the dollar, a gain in value on the day of 4.5 percent.

But many analysts say the only way for the authorities to show they are really serious about tackling Turkey's economic problems -- which include inflation approaching some 16 percent -- would be a sharp interest rate hike.

Michael Hewson, chief market analyst at CMC Markets UK, warned the Turkish tariff hikes risked provoking a new reaction from Trump and ultimately add to downward pressure on tbe lira.

"President Erdogan appears to be playing a dangerous game if he thinks he can come out on top in this spat with the US," he commented.

As a court in the western Turkish city of Izmir rejected a new appeal to free Brunson on Wednesday, Kalin said the US needs to be respectful to the judicial procedures in Turkey.

Erdogan has warned Turkey could seek alternative partners, pointing to Ankara's strong ties with Russia, Iran and China.

"The US is our major trade partner but it's not the only one," Pekcan, the trade minister, was quoted as saying by the official Anadolu news agency. "We have other partnerships and alternative markets."

Emir Sheikh Tamim bin Hamad Al-Thani of gas-rich Qatar, one of Turkey's very closest allies, arrived in Ankara on Wednesday for lunchtime talks with Erdogan.

Turkish officials have also been keen to emphasize that Ankara wants to retain strong ties with Europe, which has also expressed deep unease with Trump's trade policies.

Erdogan was due to speak on the phone with German Chancellor Angela Merkel on Wednesday and French President Emmanuel Macron on Thursday, the presidency said. 

A Turkish court Tuesday released two Greek soldiers detained since March on espionage charges for illegally crossing the border in a case that has stoked tensions with Brussels. 

source: news.abs-cbn.com

Asia shares, euro pressured by Turkish crisis

SYDNEY -- Asia's share markets slipped and the euro hit one-year lows on Monday as a fresh fall in the Turkish lira fuelled demand for safe havens, including the US dollar, Swiss franc and yen.

Japan's Nikkei lost 0.95 percent and MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.3 percent as bourses across the region turned red.

EMini futures for the S&P 500 were off 0.15 percent, while Treasury yields dipped further.

Much of the early action was in currencies with the euro gapping lower as the Turkish lira took another slide to all-time lows around 7.2400 at one stage.

It was last at 6.8450, having found just a sliver of support when Turkish Finance Minister Berat Albayrak said the country had drafted an action plan to ease investor concerns and the banking watchdog said it limited swap transactions.

The currency tumbled more than 40 percent this year on worries over Turkish President Tayyip Erdogan's increasing control over the economy and deteriorating relations with the United States.

"The plunge in the lira which began in May now looks certain to push the Turkish economy into recession and it may well trigger a banking crisis," said Andrew Kenningham, chief global economist at Capital Economics.

"This would be another blow for EMs as an asset class, but the wider economic spillovers should be fairly modest, even for the euro zone," he added.

Kenningham noted Turkey's annual gross domestic product of around $900 billion was just 1 percent of the global economy and slightly smaller than the Netherlands.

The Turkish equity market was less than 2 percent of the size of the UK market, and only 20 percent was held by non-residents, he added.

"Nonetheless, Turkey's troubles are a further headwind for the euro and are not good news for EM assets either."

Indeed, the single currency sank to a one-year trough against the Swiss franc in early trade around 1.1300 francs, while hitting a 10-week low on the yen around 125.45 .

Against the US dollar, the euro touched its lowest since July 2017 at $1.13715. It was last at $1.1392 and still a long way from last week's top at $1.1628. The dollar eased against the safe haven yen to 110.65, but was a shade firmer against a basket of currencies at 96.388.

The Argentine peso and South African rand were also caught in the crossfire.

"Contagion risks centre on Spanish, Italian and French banks exposed to Turkish foreign currency debt, as well as Argentina and South Africa," warned analysts at ANZ.

"Turkey's massive pile of corporate debt denominated in foreign currencies, but a rapidly sliding currency – and inflation that's threatening to go exponential – is a toxic combination."

In commodity markets, gold had found little in the way of safety flows and was last stuck at $1,211.80 an ounce.

Oil prices edged higher with Brent up 5 cents at $72.86 a barrel, while US crude added 15 cents to $67.78.

source: news.abs-cbn.com

Turkey is a 'target of economic war,' Erdogan says

ISTANBUL -- President Tayyip Erdogan denied on Saturday that Turkey was in a currency crisis, dismissing a plunge in the lira as "fluctuations" which have nothing to do with economic fundamentals.

Speaking after US President Donald Trump doubled tariffs on Turkish steel and aluminium imports, Erdogan described Friday's 18 percent fall in the lira to a record low as the "missiles" of an economic war waged against Turkey.

Erdogan said those who plotted against Turkey in a failed coup attempt in July 2016 were now trying to target the country through its economy, and pledged to fight back. He did not name any countries.

"Those who can't compete with us on the ground have brought online fictional currency plots that have nothing to with the realities of our country, production and real economy," Erdogan told a provincial meeting of his AK Party in the Black Sea coastal town of Rize.

"The country is neither crumbling, nor being destroyed or bankrupt or in a crisis," he said, and added that the way out of the "currency plot" was to boost production and "minimize interest rates."

The Turkish lira has lost about 40 percent this year alone, largely over worries about Erdogan's influence over the economy, his repeated calls for lower interest rates in the face of high inflation and deteriorating ties with the United States.

The two governments have been at odds over a wide range of topics - from diverging interests in Syria, to Turkey's ambition to buy Russian defense systems, and the case of evangelical pastor Andrew Brunson, who is on trial in Turkey on terrorism charges.

Erdogan also appeared to allude to a "deadline" for handing over Brunson, although he did not name the United States as having set any such deadline or say precisely when it might have expired. "(They are) threatening, saying you will send (him) until 6 p.m. ... This is not some random country. This is Turkey," he said.

A Turkish delegation visited Washington for talks this week but left with no signs of a breakthrough.

After almost 20 months in a Turkish jail, Brunson was moved to house arrest in July by a court. Since then Trump and his vice president Mike Pence have repeatedly called for his release while Ankara said the decision was up to the courts.

Washington in response sanctioned two Turkish ministers and Trump on Friday announced it was doubling the tariffs on steel and aluminium imports from Turkey, saying relations with Ankara were "not good at this time".

LANGUAGE OF THREATS

An important emerging market, Turkey borders Iran, Iraq and Syria and has been mostly pro-Western for decades. Financial upheaval risks further destabilising an already volatile region.

A meeting on Friday unveiling a new economic approach by Turkey's finance minister Berat Albayrak, Erdogan's son-in-law, did little to offer support for the free-falling lira as investors sought concrete steps such as an interest rate increase to restore confidence.

"I am asking you. What possible reason could there be behind the lira which was at 2.8 against dollar in July 15, 2016 to slide below 6 yesterday? During this period, Turkey has set records in its exports, production and employment," Erdogan said.

He repeated a long-standing plan to shift to trading in national currencies and said Turkey was preparing for such a step with Russia, China and Ukraine.

He also repeated his call to Turks to sell their dollar and euro savings to shore up the lira. "If there are dollars under your pillow, take these out... Immediately give these to the banks and convert to Turkish lira and by doing this, we fight this war of independence and the future," he said.

He also said it was a pity that Washington chose Brunson over Turkey, its partner in NATO, and in an opinion piece in the New York Times, he warned the United States that Ankara had other alternatives as allies.

Washington "must give up the misguided notion that our relationship can be asymmetrical", he said in the opinion piece.

Turkey, home to the Incirlik air base which is used by US forces in the Middle East, has been a NATO member since the 1950s. It is host to a critical part of the Western alliance's missile defense system against Iran.

In a separate opinion piece in the pro-government newspaper Daily Sabah, Erdogan's spokesman Ibrahim Kalin said Turkey's efforts to solve the crisis with diplomatic methods had been dismissed by the Trump administration, warning that "the US runs the risk of losing Turkey" as an ally.

"The entire Turkish public is against US policies that disregard Turkey's legitimate security demands. Threats, sanctions and bullying against Turkey will not work," he said.

source: news.abs-cbn.com

Stocks, dollar edge higher but safe havens get bid after Turkey, Germany attacks

NEW YORK - Stocks edged higher worldwide on Monday as Wall Street extended a rally that has pushed US stocks near all-time highs, while the dollar got a boost from Federal Reserve Chair Janet Yellen who sounded optimistic about the US labor market.

Deadly attacks late in the trading day in Turkey and Germany made stocks pare their gains, while Treasuries prices rose and the safe-haven yen firmed.

US stock indexes hit record highs last week as investors piled on bets that the anticipated fiscal boost from the incoming administration of US President-elect Donald Trump would support riskier assets.

That trend continued Monday with MSCI's gauge of global equities finishing the session modestly higher, buoyed by gains in US stocks, which were led by telecom and tech shares in a low-volume session.

"The Trump rally is still with us," said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma. "Every time something's down for two days, people jump on it. People are looking for buying opportunities."

Stocks pared their gains after news that a truck had plowed into a crowd in Berlin, killing nine people and injuring at least 50 others.

The Dow Jones industrial average rose 39.65 points, or 0.2 percent, to 19,883.06, the S&P 500 gained 4.46 points, or just under 0.2 percent, to 2,262.53 and the Nasdaq Composite added 20.28 points, or 0.37 percent, to 5,457.44.

The Turkish lira and Russian rouble fell to session lows against the greenback on news the Russian ambassador to Turkey was killed in a gun attack at an art gallery in the Turkish capital of Ankara.

The lira was last down about 0.6 percent at 3.525 per dollar while the rouble hit a session low of 62.045 per dollar before retracing to 61.854, according to Reuters data.

The safe-haven Japanese yen added to gains after the reports of the ambassador being shot and the truck attack, rising 0.75 percent against the dollar.

The dollar edged into positive territory after the release of Yellen's remarks to students at the University of Baltimore, eyeing a 14-year high against a basket of currencies touched last week. It was last up 0.2 percent.

US Treasury prices also rose after news of the incidents, with benchmark 10-year notes gaining 16/32 in price to yield 2.538 percent.

Europe's index of 300 leading shares retreated from Friday's 11-month high and fell 0.07 percent. Germany's DAX index rose 0.2 percent while France's CAC slipped 0.22 percent. Britain's FTSE 100 edged up 0.08 percent.

Japan's Nikkei stock index, which has benefited from the yen's sharp fall against the dollar, snapped its nine-day winning streak, edging down from Friday's one-year high.

MSCI's all-country world index that tracks stock markets around the globe rose 0.14 percent.

Oil prices edged lower but held just below $55 per barrel, with little news to influence the market.

Brent futures fell 0.8 percent to $54.77 a barrel, while U.S. West Texas Intermediate crude fell 0.2 percent to $51.79.

source: news.abs-cbn.com