The Turkish lira fell sharply, and Japanese stocks slipped the deepest in the region


Stock investors grappled with the index as US Treasury yields rose

Asian investors maintained their sentiment on the first trading day of March 22 when the Turkish lira fell sharply and the danger of selling technology stocks still existed.

The Nikkei index fell nearly 2% in the morning session of March 22. Documentary photo: AFP

Major stock markets in Asia-Pacific on the morning of March 22 were mixed as investors cautiously traded to observe lira movements after a sudden HR decision at Ngan. Turkey Central goods.

After the initial fluctuations, market sentiment seems more stable and the MSCI Asia-Pacific (excluding Japan) rose 0.37% this morning.

Japanese stocks this morning fell the most in the region, with the Nikkei index losing 1.91% and is expected to slide further following the falling of the lira. Meanwhile, the Topix index fell 0.95%.

On the Korean market, the Kospi index slipped 0.23%. Meanwhile, Chinese stocks had a good start to the week with the Shanghai Composite Index increasing by more than 1% while the Shenzhen Component gained higher with 1.259%. Australian stocks this morning also welcomed the green with the S & P / ASX 200 index rose 0.47%.

Nasdaq index futures edged up 0.1 percent this morning, while S&P 500 index futures slipped 0.1 percent after 10-year US Treasury yields fell a few basis points to 1. , 71%.

The above movement shows that investors were not in a hurry to sell off to ensure safety but they are still struggling to deal with the recent increase in US Treasury bond yields, causing stock prices in some sectors, especially technology, are forecast to experience a long-term decline.

Last weekend, tUS Treasury bonds experienced another wobble when the US Federal Reserve (Fed) decided to continue applying “additional leverage” (SLR) to US banks. This could reduce the banks’ demand for US Treasury bonds. Under the minimum requirement that US banks maintain an SLR of 3%, however for the identified large banks that could affect the risk of the global financial system, the index is required. 1 additional buffer step 2% higher than the minimum level must be maintained.

By keeping its loosening stance, keeping interest rates low until 2023, plus a rapidly recovering US economy and declining bond yields, the Fed said it will end policy. Loosening capital for major banks by the end of this month as planned.

Previously, in response to the Covid-19 epidemic, the Fed allowed banks to increase their reserves of US Treasury bonds and deposits without having to make provisions to hedge losses. However, this rule will end as scheduled on March 31st, according to the Fed’s statement on March 19. At the same time, the Fed said it will soon make new adjustments to the SLR rate to increase banks’ reserves.

The statements of the Fed at the end of last week are expected to cause strong shaking in the stock market.

On the currency market, the greenback this morning rose 12% against the Turkish lira to $ 1 “eat” 8,100 TRY, but has yet to reach the top of 1 USD / 8,4850 TRY. The lira depreciated after Turkish President Tayyip Erdogan shocked the market with the decision to replace the Governor of the Central Bank of Turkey, who had been on the “hawk” side in Forex. Human resource moves in the Central Bank of Turkey leading to speculation that officials will intervene to stop the lira’s depreciation.

“Mr Erdogan’s decision to fire Governor Agbal – who sought to promote price stability and awareness of the agency’s independence – has raised questions about whether the new Governor will seek to lower interest rates.” interest rate while still targeting against high inflation, “said Rodrigo Catril, foreign exchange expert at the National Bank of Australia (NAB) commented.

While the lira fell sharply, the Japanese yen was stable while the euro and Australian dollar both inched, while the US dollar index against other strong currencies also edged up to 92,080. The yen soon stabilized at 108.86 JPY for 1 USD following concerns among Japanese retail investors that the lira could slide and trading risks as the lira continues to suffer a selloff. other.

However, analysts at Citi Bank remain skeptical that the lira’s slippage will put immense pressure on emerging markets, but reiterated that the lira’s latest slippage. in 2020 it will have a low spillover effect.

“Regarding the impact on other sectors of the emerging markets, we believe that will be quite limited”, the representative of Citi said.

As for the gold market, there is currently very little indication of a need for safe haven for this asset. Gold prices slipped 0.3% to $ 1,739 / ounce.

Oil prices continued to decline after “evaporate” nearly 7% in the week before fears of slumping global oil demand prompted speculators to quickly take profits after a long rally. Brent crude oil futures this morning slid 53 cents to $ 64.00 / barrel, while the US crude oil futures prices fell 55 cents to $ 60.87 / barrel.