European lockdown worries hit travel firms, as Turkey’s stock market falls again

Over in Istanbul, stocks are falling for the second day after the shock dismissal of central bank governor Naci Ağbal over the weekend.

The benchmark BIST 100 index slumped by 5% earlier today, and is currently down around 2.5% in volatile trading. That follows a tumble of around 9.8% on Monday — the worst day since 2013.

Financial stocks are leading the fallers, with property and healthcare companies also hit, although consumer stocks are faring better.

Bloomberg reports that market-wide circuit breakers were triggered for a second day following the dismissal of Ağbal, whose recent interest rate rises had reassured investors.

President Recep Tayyip Erdogan’s ouster of Naci Agbal prompted speculation the monetary authority will break with his hawkish policies, sparking a slump in the lira and sending 10-year bond yields higher by more than 4 percentage points.

Foreign investors have a big presence in Turkey’s banking industry and the nation’s lenders have led the equity declines.

The Turkish lira is recovering a little after yesterday’s 8% slump, up around 1% at 7.7 to the US dollar.

The lira plunged 15% at one stage on Monday, amid predictions that Ağbal’s replacement, Şahap Kavcıoğlu, could cut interest rates from their current level of 19%.

Reuters reports that confusion and uncertainty over Turkey’s future gripped the markets again today:

Opposition politicians seized on what they called a dangerous and baffling move by the president to oust a bank governor, Naci Agbal, who had gained market credibility as an inflation-fighter in less than five months on the job.

“The ridiculous steps you take, the unqualified people you appoint are not enough,” Iyi Party chairwoman Meral Aksener said in parliament. “Every error you insist on carries us deeper into trouble … We are on the verge of a balance of payment crisis.”

Here’s more reaction to the UK labour market report: