Terror attack weighs on lira, bourse

LONDON - Reuters

REUTERS photo

Turkish stocks and the Turkish Lira fell on Oct. 12 while debt insurance costs rose as a blast that killed at least 97 people over the weekend raised fears of further pre-election turmoil, though many other emerging assets extended their recent gains.

The twin suicide bombing at a peace rally in Ankara is likely to exacerbate uncertainties ahead of the Nov. 1 elections. 

The lira weakened 0.6 percent against the dollar to around 2.92, after hitting an eight-week high last week, while Istanbul stocks slipped around 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, a global fixed income strategist at Lombard Odier. “Indeed, the increased chances of another hung parliament in the coming elections are 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.