· Turkey’s Central Bank cut rates by 100 point today from 14% down to 13%. This surprised most investors, who expected the rates to stay stable. The Bank’s main concern for this rate cut was to get growth back up to speed after a loss of momentum. The government, which is synonymous with the Central Bank in Turkey, has been prioritizing growth over inflation for some time. This cut is expected to result in a 87% inflation and 22 USD/TRY parity.
· The BIST ended 1.34 higher today, as a result of the rate cut, extending its rally. The index gained 20.71% in the last month. However, it should be noted that this number may be deceptive because of the high inflation and the volatility of the Turkish lira.
· US Stocks wobbled between positive and negative territory for the majority of the day, before finishing slightly on the positive side at the end of the day. The S&P gained 0.23%, the DOW closed 0.06% higher, and Nasdaq added 0.21%. Also, newly released labor data showed that the jobless claims were down, a sign that the job market is holding up against the threat of recession. Today’s mixed market was a cause of the vague tone of the Fed minutes, which stated that both too much and too little rate hikes are dangerous. For the last month, many investors were betting that inflation and rate increases would ease, causing the stocks to rally. However, after the Fed minutes, we might see the market losing some of that momentum.
· The Europe Stoxx 600 gained 0.4%, while Asian Stocks lost. Japan’s Nikkei 225 slid 0.96%, the Shanghai Composite lost 0.46%, and Hong Kong’s Hang Seng closed 0.80% lower.
Sources: Yahoo Finance, Bloomberg
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