FTSE higher as lira turns corner
Fiona Cincotta August 14, 2018 9:57 AM
Turkey’s central bank managed to calm down the currency markets for the time being by committing to provide liquidity for the embattled Turkish lira and the currency’s two day free fall has finally slowed.
FTSE higher as lira turns corner
The lira even managed to claw back some lost ground, trading 6% higher against the dollar this morning, allowing stock and commodity markets to recover. The FTSE is trading up 0.27% as the lira fear factor has declined and the DAX is up 0.67%, helped by German economic data which showed that growth in Europe’s largest economy sped up in the second quarter, outpacing the rest of the Eurozone. Germany’s annualized GDP growth is now at 1.8% compared with the Eurozone’s 1.5%.
The pound and the euro are both looking a little healthier this morning with sterling trading 0.26% higher against the dollar and up 0.24% against the euro.
While the immediate fire of the Turkish lira has simmered down, other tinder is starting to cause concerns for stock markets. Chinese economic data including retail sales, industrial output and urban investment were all reported at a lower level than forecast in July, causing Shanghai stocks to dip 0.9%. Lower Chinese numbers will be a cause of concern for many commodity markets because a slowdown in the Chinese economy will dampen demand for key commodities such as oil, metals and agricultural goods.
Saudi cuts oil output, boosts prices
Oil cartel OPEC is already taking into account that China might require less oil next year and has revised downward its expectations for crude oil demand in 2019. The group’s largest member Saudi Arabia has pumped out less oil in July trying to avoid a situation in which oversupply knocks down oil prices. The market reacted promptly with Brent Crude trading up 0.77% and West Texas Intermediate 0.91% higher.
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