- ASX SPI 200 futures up 1.2% to 7,271.00
- Dow Average up 1.8% to 33,212.96
- Aussie up 0.9% to 0.7161 per US$
- U.S. 10-year yield little changed at 2.7378%
- Australia 3-year bond yield rose 3bps to 2.75%
- Australia 10-year bond yield rose 5bps to 3.26%
- Gold spot up 0.2% to $1,853.72
- Brent futures up 1.7% to $119.43/bbl
Stocks are set to open Monday with an upswing after US equities chalked their best week since November 2020 as traders debate whether the end of the selloff is near.
Futures rose in Japan and Australia as well as in Hong Kong earlier. The S&P 500 wiped out its May losses and snapped a string of seven weekly losses as institutional investors rebalanced portfolios into the end of the month. US markets will be closed Monday for a holiday.
The dollar traded within tight ranges versus major currencies and the euro fluctuated as the European Union failed to agree on a revised package of Russian sanctions.
In China, Shanghai offered some tax rebates for companies and allowed all manufacturers to resume operations from June as authorities rolled out scores of policies to revitalize an economy impacted by Covid lockdowns.
President Recep Tayyip Erdogan spoke up against higher interest rates as a remedy for inflation a day after Turkey’s central bank opted to carry on with its ultra-loose approach, even as pressure builds on consumer prices and the lira.
“Those who try to impose on us a link between the benchmark rate and inflation are either illiterates or traitors,” Erdogan said on Friday in Istanbul, addressing a group of businesspeople. “Don’t pay attention to the ramblings of those whose only quality is in viewing the world from London or New York.”
Erdogan has frequently blamed what he used to call an “interest-rate lobby” for driving up the cost of borrowing and engaging in speculative attacks against the currency. Before installing Sahap Kavcioglu as governor of the central bank last year, Erdogan ousted his three predecessors and increasingly sought more say over monetary policy.
Still, the president acknowledged that the economic policies his government has followed since 2018 have exacted a “heavy toll” in the form of a higher cost of living for citizens. At 70%, Turkey’s annual inflation is currently 14 times higher than the central bank’s official target.
Erdogan has nevertheless defied orthodox economic views, insisting that high rates are the cause of faster inflation, not the opposite. The central bank kept its benchmark at 14% for a fifth month on Thursday, leaving Turkey with the world’s deepest negative rates when adjusted for prices.
The Turkish lira has weakened 8.4% against the dollar in May, making it the worst performer among emerging-market currencies. Inflation is expected to accelerate past 74% in May, according to the median estimate in a Bloomberg survey of 15 analysts. The statistics office will publish the data on June 3.
Whatever the cost, Erdogan defended his government’s economic program as “consistent and scientific” and said the lira’s current level helps preserve Turkey’s competitiveness.
“All of us are in the same ship,” he told the audience on Friday. “There’s enough data to spur hope. We are doing well on production, employment and exports.”