Turk assets rise as global markets revive, Fed rate decision awaited

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Turk assets rise as global markets revive, Fed rate decision awaited
Oluşturulma Tarihi: Mart 18, 2008 09:07

Turkish markets rebounded on Tuesday from Monday’s 14-month lows, as the global markets recovered after the investment bank Lehman Brothers’ results beat the expectations, but analysts say cautious due to persisting fears for the health of financial system. Fed funds futures are reflecting expectations the central bank will cut its key fed funds rate by 1 percentage point. (UPDATED)

Haberin Devamı

Turkish stock exchange closed up 3.3 percent, while lira rose more than 2 percent against dollar. Dollar fell below 1.24 YTL level. On Monday lira fell 4 percent and the stocks closed down 7.45 percent.

 

The chilling effects of the weekend's fire sale of Bear Stearns (BSC) spread into emerging markets Monday as investors wary of unsustainable debt punished stocks and pummeled currencies. Turkish assets were among the hardest hit as the chief prosecutor’s lawsuit against the ruling AKP demanding its closure added to global woes.

 

A U.S. interest rate cut at the Federal Open Market Committee's meeting on Tuesday could bring temporary relief to emerging markets such. But analysts warn the effects of the rate cut may not last long. Fed funds futures are reflecting expectations the central bank will cut its key fed funds rate by 1 percentage point.

 

Haberin Devamı

Markets doesn’t think even that rate cut would solve the problem, Erdal Saglam, columnist at Hurriyet, said. “Because everybody is aware that you can’t handle the global crisis with rate cuts”, he added.

 

Meanwhile Merrill Lynch cut its outlook on Turkey's external debt on Tuesday to underweight from market weight due to factors such as political instability and a prolonged slowdown in reforms.

 

LEHMAN’S RESULTS

Lehman Brothers said profit fell 57 percent, less than analysts estimated, a day after the fourth-largest U.S. securities firm lost 19 percent of market value following the fire sale of Bear Stearns, Bloomberg reported in its website.

 

First-quarter net income declined to $489 million, or 81 cents a share, from $1.15 billion, or $1.96, a year earlier, the New York-based firm said in statement today. Earnings were depressed by a $1.8 billion writedown caused by the slump in the mortgage market.

 

Haberin Devamı

The reduction in asset valuation pushed fixed-income revenue 88 percent lower, to $262 million. Other business grew. Equities revenue rose 6 percent to $1.4 billion. Merger advisory fees climbed 34 percent to $330 million and investment-management revenue jumped 39 percent to $968 million.

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