Erdogan’s Speech Adds To Market Gloom, Geopolitics Weigh

The manner in which investors hung with anticipation to the address from Turkish President Recep Erdoğan on Tuesday has highlighted that geopolitical risk headlines are back on the frontline radar of financial markets.

Those hoping that the Turkish president would have made new revelations were largely left empty-handed after Erdoğan mostly repeated information that has already been circulated. However, he did speak with enough conviction to show that this situation will not be going away anytime soon.

This consequently means that an element of political and geopolitical risk will remain in the marketplace, meaning that we can expect further pressure on riskier assets as investors become reluctant to take on risk. Stock markets are at threat of remaining pressured, while many emerging market currencies are once again noticing a lack of buying demand.

There has however been an increase in valuation for both Gold and the Japanese Yen, highlighting investor anxiety over the return of potential geopolitical tensions and a green light for an overdue rally in safe-haven assets How will the Trump Administration respond? The strongest takeaways from Erdogan’s address were arguably his admission that he will continue to pursue the investigation into the journalist’s disappearance.

This is an incident that has received widespread negativity with world leaders demanding “credible facts” from Saudi Arabia. Most will now be awaiting to see if President Trump comments on the speech from Erdogan earlier today.

This is obviously an unusual situation which would normally be seen as a political or diplomatic issue, but it has attracted international attention and it highlights that investors do need to reassess potential geopolitical risks as a result. Emerging market currencies in crosshair Emerging market currencies were an easy target for sellers today as concerns over Italy’s budget, trade tensions, Brexit uncertainty and geopolitical tensions soured risk appetite.

With risk aversion likely to remain a dominant theme this week amid the mounting geopolitical tensions, this is bad news for EM currencies. The selling momentum is set to intensify if the Dollar later jumps on potential safe-haven flows.


This written/visual material is comprised of personal opinions and ideas. The content should not be construed as containing any type of investment advice and/or a solicitation for any transactions. It does not imply an obligation to purchase investment services, nor does it guarantee or predict future performance. FXTM, its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness of any information or data made available and assume no liability for any loss arising from any investment based on the same. Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 89% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

0 0 votes
Notify of
0 评论
Inline Feedbacks
View all comments