European Markets Drifted Lower In Thin Trading, Erdogan Secured Third Term In Turkey

Bridgette Randall
29 May, 2023
Frankfurt

European markets traded higher in thin trading after the tentative U.S. debt deal raised hopes for the federal government averting fast approaching default. 

Benchmark indexes in Frankfurt and Paris lacked direction and struggled to advance. 

Market sentiment was mildly positive after the U.S. President Joe Biden and congressional leaders reached a tentative debt ceiling deal. 

The debt deal is still facing a tough road ahead and needs approvals from the House and Senate where hard-right Republican lawmakers are likely to vote against the bipartisan agreement. 

Turkish stock market jumped 3.2% after president Recep Tayyip Erdogan secured a third term in a runoff election held over the weekend. 

Erdogan won 52% of votes and his rival Kemal Kilicdaroglu of the Republican People's Party attracted 47.86% of votes, according to Turkey's Supreme Election Council.

Turkish lira dropped to a record low of 20.07 against the U.S. dollar as investors awaited future government's plans to combat sky-high inflation. 

 

Europe Indexes & Yields 

The DAX index decreased a fraction to 15,983.08 and the CAC-40 index declined a fraction to 7,317.30, and financial markets in London were closed for a holiday. 

The yield on 10-year German Bunds inched lower to 2.44%, French bonds traded lower to 3.01%, the UK gilts inched lower to 4.33% and Italian bonds decreased to 4.29%.

The euro edged lower to $1.074, the British pound to $1.235 and the Swiss franc to 90.37 cents.

Brent crude decreased 42 cents to $76.52 a barrel and the Dutch TTF natural gas decreased €0.82 to €25.32 per MWh.

 

Europe Stock Movers 

Banks led the gainers in trading in Frankfurt and Paris in light trading. 

UBS, Deutsche Bank, BNP Paribas and Commerzbank advanced between 1% and 1.4% in light trading. 

German automakers BMW and Volkswagen gained 1%. 

Richemont SA gained 2.5% in Zurich and LVMH Moet Hennessy Louis Vuitton SE edged up a fraction in Paris trading.

 

Mixed Trading In Asian Markets

The Nikkei index in Tokyo jumped 1.0% to 31,233.54 and reached a new 33-year high and the yen drifted to 140.26 against the U.S. dollar.  

In Shanghai, the benchmark index traded higher 0.3% to 3,221.45 but the Hang Seng index declined 1.0% 18,551.11 and traded at a new low in 2023. 

China's domestic tourism reached pre-Covid level during the May Day holiday period as demand for travel picked up but the overall domestic spending struggled to rebound.  

The arrival of Chinese tourists in Thailand and Japan also picked up sharply during the holiday period, raising hopes that the broader economic revival will pick up in the months ahead.  

China has lost about 30 million service jobs in the last three years of Covid-related business closures and many small businesses are struggling to stay afloat in the absence of direct financial support from the government.