Click to see full-size image
Both the Turkish and Russian economies are showing negative tendencies, as the tensions in Idlib between Moscow and Ankara are rising.
The Borsa Istanbul 100 Index slumped 10% at the open on February 28th, its biggest intraday drop in almost seven years, led by lenders Akbank TAS and Turkiye Garanti Bankasi AS.
The yield on two-year government notes surged more than 50 basis points.
Bloomberg cited two unnamed traders with knowledge on the matter, according to whom Turkish state banks were selling dollars aggressively as the Turkish lira lost 0.8%.
“The market is clearly very nervous,” said Piotr Matys, a strategist at Rabobank in London. “It is essential to defuse tension and avoid a direct military confrontation between Turkey and Russia over Syria.”
The Capital Markets Board banned short-selling in the Turkish stock market on February 28th, it said in an emailed statement. It did not mention whether the ban would be extended into the following week.
“It’s difficult to be optimistic,” said Nigel Rendell, a senior analyst at Medley Global Advisors LLC in London, pointing to uncertainties around Turkey’s monetary policy and currency measures. “Without some breakthrough with the coronavirus, even a partial resolution of the Syrian crisis will not be enough to decisively swing sentiment around.”
On the Russian side, the RTS index collapsed by 7.68% to 1279.74 points at 12:30 Moscow time, according to the Moscow Exchange. The Moscow Stock Exchange Index is down 5.16% to 2765.32 points.
A sharp decline in the RTS index occurred against the backdrop of a weakening ruble ($1 rose above 71 rubles) and a fall in oil prices – on February 28th, Brent crude fell below $50 per barrel.
The US market began to fall on February 24 because of concerns about the risk of a coronavirus pandemic. Later, these concerns spread to Russian investors.
Now global markets are waiting for the largest central banks to take reciprocal steps aimed at preventing the implementation of the worst-case scenario and mitigating the possible consequences of the coronavirus problem, according to experts.
At the same time, if monetary authorities delay or show indecision, this may aggravate the already serious situation in world markets, which has signs of growing panic, analysts are sure.
For Russia this is largely due to the weakening ruble, as well as the fall in oil prices.
The most active Brent crude contract for May was down 90 cents, or 1.7%, at $50.83 a barrel by 0141 GMT, a 14-month low. The international benchmark, which fell about 2% on February 27th, has shed around 12 per cent this week and is on track for its steepest weekly decline since mid-January 2016.
The producer group known as OPEC+, which is currently reducing output by roughly 1.2 million barrels per day to support prices, is set to meet in Vienna on March 5-6.
“We now believe the group needs to make much steeper cuts than the 600,000 barrels per day (bpd) recommendation from their technical committee to support prices,” Jefferies analyst Jason Gammel said.
“At least a 1 million bpd cut for the second quarter strikes us as necessary to merely moderate inventory builds, and we confess to underestimating demand destruction over the last several weeks.”
For Turkey due to the worsening relations with Russia, since a potential loss of Russian tourists is possible, as well as worsening trade relations, such as an inability to export tomatoes to Russia, in addition to other potential sanctions that can be adopted by Moscow.
There is a wider negative trend in the global economy for a while, and the coronavirus is used as a sort of justification for the worsening conditions, due to how “popular” hysteria regarding it is in the media sphere.
Both Turkey and Russia have little interest in an open conflict and a worsening in their relations, be it military, trade or otherwise.
The general global situation at the currently moment, and the likely incoming economic crisis are creating conditions that make it possible to settle various economic issues through a local conflict, and this is not a recent occurrence, as it has happened repeatedly in the past.
MORE ON THE TOPIC:
Oh no! USA markets fall too because of Idlib crisis! Alarm! Alarm! Call both Batman and Superman urgently!
Hey SF where do you get this kind economy of analysts? The must go to economic school again to learn some basics. This fall in Turkey and Russia means carry traders are falling to cash and change local currencies into dollars because of uncertainty on the USA markets. And in Russia, of course, rouble drops because of oil prices too. On other hand, Erdogan has to spend more dollars to support his currency now.
Turkey is exporting still to China, Russia gas and oil to China and EU. The slowing of their economies are not so abrupt right now but they will suffer more in the long run than established economies of US and EU, as it happened after 2008
Bacon, USA debt is almost 22 trillions. Calculate by yourself what sum USA have to add if treasuries price will grow by 1%. Sweet dreams.
Harry, ‘USA debt’ is not real debt, like let’s say Greece’s or Italy’s debt to IMF. They add inflation to that sum which is around 30%, then another 30% is owed to pension funds, the rest is real debt but proportionally with their GDP is 5 times smaller than Greece’s debt.
That is the biggest crocsht going,allready california have leppers +homeless,
The real economy will drwarf the fake economies,once the bring back the gold:
Conversely the fools did not vote in perot,oh well here we go zombie apocaplypse
https://www.youtube.com/watch?v=mPIVI0CbCmg
Welcome to the real world:
Let me explain you a simplification of the real debt issue. Modern state debt of USA & EU is based on to things:
1. Euro and US dollar are world reserve currencies.
2. Debt is selling on the free market as treasuries or bonds.
If one of these foundations drops then all the system goes down. For 1 try to google for Basel III. For 2 gonna try to explain you as simple as I can.
Treasuries are just simple papers that may be converted in dollars after a period of time. The most spicy treasuries feature – USA govt is NOT obligated to buy treasuries at the end of their term. It is just promise to buy this paper at price of 10 000 I.E. So USA govt issues these paper and market players just buy it with the price lower than nominal. Let’s say 9 990. That means if USA govt wants to get loaned with 999 millions it has to sell 1000 treasuries. If market loses the trust into USA govt, or number of treasuries is too high at the market then price of the treasuries drops. So to get 999 millions from the market USA govt has to sell more treasuries, let’s say 1100. But that means in the end of the treasuries term USA govt has to pay not 1 billion but 1 billion 100 millions.
The opposite is true,to be frank,if anything heterosexuals do it stronger than fake stocks:
Quite right. Share prices have generally fallen by an average of 10% around the globe in the last week or two, with airlines, cruise companies etc falling the most. circa
16 -20% or even more.
No nations are immune from this. The US Federal Reserve has been ‘creating’ billions of dollars every night to shore up the US Overnight Banking Repo Market.
The world is drowning in debt with a few exceptions, and Russia is one of those.
The US stock market is STILL way, way overvalued. 40%? Who knows, but it’s a Fed-created Ponzi scheme. Idlib is insignificant in the overall scheme of things. China & Korea grinding to a halt, overpriced oil returning to reasonable levels and the imminent collapse of the U.S. economy (because so much is dependent on the stock market Ponzi scheme). Everyone knew this was going to happen, the only question was: “When?” – I’m guessing NOW. It’s so messed up that even a war won’t fix anything. Not that they won’t try.
Its going to be a roller coaster year I think.
I’m glad I am retired with zero debt :)
I just wish that interest rates would rise to historic norms so I can leave
more money to horse and cat rescue charities when I die :)
Well I hope you don’t rely too much on the markets. And in situations like this, interest rates go down not up unless there is a collapse of the economy and currency. Which also isn’t very pretty.
If the US collapses the rest of the world also collapses but with a bigger bang. If the US doesn’t collapse, much of the rest of the world still can collapse.
Not anymore,incase you wern’t aware there is a world wide rebellion vs fakes:
I think the current drop started when China closed most of it’s production due to the COVID-2019. That leaded to decrease of transportation, which means less fuel consumption and more reserves of crude oil. That’s why oil features dropped. And, at my humble opinion, as most of day by day trade is made but bots, their algorithm is configured to sell stocks when oil drops. Usually oil drops if global economy goes down. At my point, fat cats now are slowly buying stocks, because at the moment some positive news will appear, bots will start to buy stocks, as most of the simple hamsters on the market. While fat cats will make another millions from the air.
Correct.
To add to what you said, the globalised supply chain that is based on ‘Just in Time’ deliveries for production of all sorts of components is seizing up. Land Rover UK say that they will have to stop the production lines this week. Add to that retailers whose products are stuck in Asian ports and we have a perfect storm.
Its as if it was all planned by an elite group of people :)
Yeah. There is a saying in Russian: stupid people have same thoughts. ROFL.
If you will add here that COVID-2019 is all over the world now then puzzle is done. Because very few countries in the world would be able to apply the restrictions China applied. Hope you watched videos when people are arrested by the Chinese police just because they were without mask. And of course videos of forced hospitalization and a hospital built in a couple of weeks.
Wondering if any of EU countries would be able to apply such restrictions on their own citizens. As for Africa, Middle East and South America: most of these countries don’t have the recourses to successfully fight with COVID-2019.
It doesn’t look good. But the US and other advanced countries usually do better in these situations than the rest.
Australia yes,because they have real gold and other natural goodies,usa hell no!
You must be super rich from your brilliant understanding of the markets.
Look at the very rich people. Most of them are from higher class or upper middle class. It is a fair tale that ordinary guy can became a super rich person.
The fall off in oil prices will seriously harm Russia well before any increase in debt will hurt the US.
Russia is happy with $40-45 per barrel,because they can do things better,
usa cannot,their fracking may come to a ginding halt needing the sauds to buy in:
Slow down is expected in the near future for all world economies. Especially for oil and gas export based economies.
That`s the significant relation.
I see only agriculture down a tad and travel,that is to be expected,but atomic,fuel fossil gas,uranium,coal exports are absolute bullet proof,which means dud economys will crumble the most,bad new for fake economys,good news for gold backed currencys
as they with the most green debted ecology for example infastructure killing eu/epp
will be the most forthright to feel the sharp blow of the iron sickle,they just never learn:
Yep, Putz Putin’s Russia and Islamist Iran are heading into even deeper doo doo. And the Putz’s Greater Russia Follies and a new arms race with the US just bring the RF closer to joining the thankfully dead Russian Soviet Empire in the dustbin of history. While Islamist Iran further collapses under the spread of the Coronavirus, May Allah be praised.
Guess what bot,you got another thing coming,you got nothing on the truth,fk all (period)
No you don not understand the fundamentals of transit,they with the factual pipes and gold backed currencys will be the most resilient as opposed to nocando wall st airheads fake wealth!
I really don’t know what you’re talking about. The US has the largest gold reserves in the world, by a considerable margin.
World oil consumption is going to drop significantly. And so will oil prices. So revenues from oil sales will go down. This is simple economics.
No they don’t no one has actually seen it,many suspect they link g7s wealth and try for the culminated combined numbers make it seem real just like their fake #1 oil jive,where infact they account for saudies and others using their currency,not exactly independant extraction,regardless big numbers are big numbers,too easy
This was usas last opportunity,though trump is quietly working towards such a system,where it’s likely the phaed to be audit for unconstituate,illegal stealing of taxpayers after clinton killed off glass steagall,massive game changer for usa!
https://www.youtube.com/watch?v=75aNW3vrLPs
turkey needs to get it priorities right and leave idlib and concentrate on getting the jews kicked to kingdom come – as long as netanyahu is allowed to spread discontent and cause hardship for each and every original middle eastern there will be no peace – the jews need to be terminated and the quicker tht iran and turkeyand russia team up with iraq /pmu and syria the quicker the jews will be a memory at best
Bloomberg are fake economy garbage talk,real world sees russia gaining on all fronts but resources just about all intact infact real energy and power is 100% resilient to coronavirus,as for turkey they are atleast dealing with the events with much unmentioned transit of energy that dwarfs minion sanctions!
As long as they have gold to fall back on,such nations will come out stronger than ever,just saying: