Bomb blast weakens Turkish assets while emerging stocks hit one-month high

LONDON/ISTANBUL - Reuters

REUTERS photo

Turkish assets have struggled after a suicide car bomb attack killed 28 people in Ankara, although emerging stocks gained for a fourth straight day, reaching their highest in more than one month on Feb. 18. 

The Turkish Lira weakened 0.2 percent against the dollar and the yield on Turkey’s sovereign dollar bonds rose four basis points (bps) on the day to 335 bps. The general optimistic climate in emerging markets following the Federal Reserve’s signals have limited further negativities over Turkish assets, according to analysts.

“Last night’s deadly bomb attack in Ankara is yet another sign of the risks that can lead to a tougher domestic political stance,” said Simon Quijano-Evans, chief EM strategist at Commerzbank in London. 

“[It’s] a tough time for Turkish assets,” he added. 

Emerging stocks also gained as rising oil prices increased investor appetite for riskier assets. 

Signs the Fed were scaling back its plans for rate increases also helped to offset a fresh round of rating cuts on oil producers, a rate hike in Mexico and emergency moves by Venezuela to try and shore up its finances.

“Oil prices have been supported by the production freeze agreement between Russia and Saudi Arabia – Iran gave it a cautious welcome and the market wants to take this as a positive signal,” said Sebastian Barbe, head of EM FX and fixed income at Credit Agricole.