Erdogan shocked markets by replacing Turkey’s hawkish central bank governor
Asian stocks finished mixed on Monday, recovering from early losses witnessed amid a plunge in the Turkish lira that spook investors. The lira plunged almost 15% versus the US dollar after President Recep Tayyip Erdogan shocked markets by replacing Turkey’s hawkish central bank governor with a critic of high interest rates. The U.S. Federal Reserve’s announcement that it would end some emergency measures for banks added to a cautious tone during the session.
As such, Japan’s NIkkei 225 fell 2.07% and Hong Kong’s Hang Seng index inched 0.36% lower. The Shanghai Composite gained 1.14% and Australia’s S&P/ASX 200 advanced 0.66%.
In Europe, equities opened marginally lower, with US stock index futures being mixed-to-lower as investors keep a cautious tone despite a retreat in the US 10-year Treasury yields from recent peaks. The resurgent concerns over a third wave of coronavirus infections in Europe keep recovery attempts in check. The pan-European Stoxx 600 was down 0.3% in early trade.
In currencies, the greenback turned marginally lower following the initial gains as bond yields correct lower. EURUSD dipped to nearly two-week lows around 1.1870 earlier in the day before bouncing to the 1.1900 area in Europe. However, it looks like the common currency may lack the recovery momentum to overcome this immediate barrier in the short term as risk-off sentiment prevails in the global financial markets.
Meanwhile, oil prices are trending marginally higher to start the week, trying to recoup massive losses seen last Thursday when Brent crude lost over 7%. The futures have settled marginally above the $64 figure, still trading below the 20-DMA that now acts as the key upside hurdle for bulls. A steady dollar coupled with virus-related concerns in Europe and rising drilling activity in the US will likely cap the upside potential in the short term.
