Global tumult causes jitters in Turkish markets
Posted by meb at March 1st, 2007
Stocks in Turkey continue to decrease in value but there was no rush selling yesterday, unlike Tuesday when İMKB lost 4.45 percent of its value
Turkish markets yesterday struggled to recover from continued jitters stemming from what some economists called a global meltdown that began on Tuesday with the 8.84 percent drop in the Shanghai Composite Index.
The Istanbul Stock Exchange (İMKB) began the day in a bullish mood, dropping by 1,305 points to a low of 40,468 in the morning session. The morning session closed 722.70 points low, but rose by 379.71 in the afternoon, closing at 41,430.99 points. At the IMKB stocks lost 0.82 percent of their value yesterday.
The declines were seen as a reaction to Tuesday’s sharp market fall in China and raised questions about whether a larger correction was in the offing, and resulted in sell-offs all around the world. Elsewhere overnight, Dow Jones fell by 3.3 percent and Nasdaq by 4 percent.
With the Shanghai Composite Index rising by 4 percent on Wednesday, erasing nearly half of the previous day’s losses, the rest of the world was pushed on the road to recovery.
The market’s direction also may be set by fourth-quarter gross domestic product data and congressional testimony from Federal Reserve Chairman Ben Bernanke overnight.
After Tuesday’s loss of 4.45 percent, the İMKB lost 5.27 percent of its value on two days due to the global tumult caused in China.
The global fluctuations also affected the exchange markets, with the Turkish lira partially covering the previous day’s depreciation on Wednesday. The lira had depreciated from YTL 1.38 to a dollar to 1.435, but recovered to close Wednesday at 1.4115.
Bernanke, whose comments will come two days after his predecessor, Alan Greenspan, warned of the possibility of a recession in 2007, will be watched closely for any indication that the Fed may change its stance on interest rates.
Investors were also focused on economic data after a weaker-than-expected manufactured durable goods report added to economic worries in the previous session.
“I think you’ll see a rally early and I think you’ll see some selling pressure midday because the Asian situation is not totally rectified yet,” said Tim Smalls, head of U.S. stock trading at brokerage firm Execution LLC in Greenwich, Connecticut, to Reuters.
“In light of the economic data we’ve seen the last couple days, people will look at the GDP, and people will watch to hear what Bernanke says about the Asian situation. That’s where I think we’ll get our cues.”
It had taken the İMKB nine months to recover from a crisis in May 2006, and had reached a high early last month. Experts were saying that the dollar could even balance around the 1.30-1.37 level.
The May-June crisis in the developing world, which hurt Turkey more than most countries, began with a U.S. Federal Reserve announcement that it would continue with its rate hikes. There were local concerns over the global meltdown affecting Turkey more than others, but Wednesday’s comparable recovery put some fears to rest.
Source: ISTANBUL – Turkish Daily News
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