2023-05-15 13:01:06
AIn view of the uncertainties surrounding the Turkish presidential election and the dispute over raising the US debt ceiling, European investors remained cautious at the start of the new week. The Dax and EuroStoxx50 rose by 0.2 percent to 15,939 and 4327 points respectively by midday on Monday. The surprisingly strong performance of Turkish President Tayyip Erdogan in the first round of elections meanwhile sent the Istanbul stock market plummeting and weighed on Turkish bank shares in particular. Polls ahead of the election put opposition leader Kemal Kilicdaroglu ahead.
After counting almost all votes, Erdogan is just ahead of his challenger Kilicdaroglu. However, neither of the two candidates was able to gather an absolute majority in the first round, so that there will be a runoff in two weeks. “This is a major disappointment for investors who were hoping for opposition candidate Kilicdaroglu to win and return to the orthodox economic policies he promised,” said Hasnain Malik, an analyst at analyst firm Tellimer. In the parliamentary elections, Erdogan’s AK party is well ahead of the opposition alliance. Even if Kilicdaroglu prevails in the second ballot, he would not have a majority in parliament.
After a price slump of up to 6.7 percent and a temporary interruption in trading, the leading Turkish index limited the losses in the course of trading to 2.5 percent. In contrast, bank titles in Turkey remained under pressure; the industry index fell by around nine percent. The prospect of a presidential runoff in Turkey also dragged shares in Spanish bank BBVA. The money house lost almost five percent in Madrid and was thus the greatest burden for the Spanish blue chip index. One trader said the reason for the decline was the “tight elections” in Turkey. BBVA has an 86 percent stake in Turkey’s Garanti Bank, which collapsed 10 percent in Istanbul.
Investors are getting rid of bonds
The general uncertainty made investors turn to gold. The price of the precious metal rose by up to 0.5 percent to 2021 dollars per troy ounce. In order to avoid a US default, US President Joe Biden wants to meet with leading representatives of Congress on Tuesday to discuss raising the debt ceiling. On the other hand, investors sold bonds. In turn, the yield on 10-year Bunds rose four basis points to 2.307 percent. Rising inflation expectations caused investors to bet on further interest rate hikes.
Central banks are concerned about the impact of inflation, such as higher wage demands, said Jens Peter Sørensen, chief analyst at Danske Bank. “The data on inflation expectations in the US on Friday were quite high.” Council member Peter Kazimir also said on Sunday that the European Central Bank (ECB) may have to raise interest rates for longer than originally assumed in order to curb inflationary pressures.
After initial losses, Siemens Energy worked its way up to the top of the Dax with a price increase of up to four percent. The power engineering group delivered better-than-expected results in the second fiscal quarter with a strong performance in the gas business, a trader said. “Nevertheless, the company had to be more cautious due to the ongoing challenges at Gamesa.” The group now expects the earnings margin before special items in the 2023 financial year to be at the lower end of the forecast range of one to three percent due to the weak development at the Spanish subsidiary.
After surprisingly strong numbers, investors took AXA. The insurance group’s shares rose by up to 3.2 percent in Paris, making them among the biggest winners. Analysts pointed to positive surprises in the solvency ratio.
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