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Turkish assets plunge after Wall Street selloff

Turkish assets plunge after Wall Street selloff

The European share market fell on Wednesday following a Wall Street sell-off overnight. Meanwhile, the dollar rose from its five-month low in anticipation of the Federal Reserve's rate decision later that day.

Turkish bonds, stocks and the Turkish lira have all fallen, while

Turkish authorities detained

The main political rival of President Tayyip Erdoan on Wednesday was his main rival.

The pan-European STOXX 600 Index was down by 0.1% last session after having risen for three sessions in a row, thanks to the boost from

Germany's overhaul

Spending more money on infrastructure and defence is a way to get around the debt limits. Germany's DAX fell 0.3% on Wednesday after reaching a new record high.

The European stock market took its cues from Wall Street. Equity indices on Wall Street fell on Tuesday, as investors worried about a slowdown of growth due to tariffs.

Tuesday, the Nasdaq fell 1.7% and the S&P 500 dropped 1.1%. Tech stocks were especially hard hit. S&P futures showed a muted Wall Street opening on Wednesday, with S&P contracts rising 0.1%.

U.S. stocks are down this year due to President Donald Trump's tariffs.

Uncertainty is sown

Investors, companies and households are all involved.

The European share market has performed much better thanks to plans for increased defence spending to counter Trump's isolationist policies. Also, Germany has made major fiscal changes and there are hopes that the war in Ukraine will end soon.

Overnight, Asian stocks were unable to find direction. Japan's Nikkei 225 fell 0.25% while China's CSI300 edged slightly higher.

Tim Graf, State Street's head of EMEA Macro Strategy, said that the idea of a U.S. slowdown in growth is still prevalent. There's a growing awareness that the growth is likely to get worse before getting better.

Graf believes that the small fall in European stocks Wednesday is likely due to dissatisfaction with the peace process after Russian President Vladimir Putin

Vladimir Putin

Refrained from endorsing an entire 30-day ceasefire.

The dollar index rose 0.25%, to 103.57, after falling to a low of 103.19 for five months on Tuesday. This was due to the rally in the euro following the lower house of parliament's approval of the German budget bill.

The dollar's value against the yen rose slightly after the

Bank of Japan

Last up 0.2%, at 149.60.

Now, let's turn our attention to

The Fed

Investors will focus on new economic projections amid tumbling stock markets and signs of tightening credit. Investors are focusing on the new economic forecasts in light of the tumbling markets and signs that credit is tightening.

LSEG data revealed that the markets have priced in roughly 60 basis points in easing from the Fed this year, with the first reduction fully priced for July.

TURKISH SELL-OFF

The Turkish Lira fell in its largest daily drop since the height of the most recent economic boom.

Currency crisis

In June 2023, the last time that dollar was traded was at 39 cents. This is a drop of around 5%.

Investors sold their Turkish assets on Wednesday after the authorities arrested Ekrem Imanoglu, popular Istanbul mayor, for charges of corruption and aiding terrorist groups. The main opposition party called this arrest "a coup on our next president".

Analysts said that the arrest raised concerns about Turkey's economic reforms.

Nick Rees is the head of macro-research at Monex Europe. He said: "Traders were complacent and this spell has been broken. The dramatic results are that traders have repriced Turkey's political risks premia, which triggered today's sharp selloff in lira."

Analysts believe that the removal of the Turkish lira will likely boost the U.S. Dollar.

(source: Reuters)