18 July 2016 at 11:49 GMT
European stock markets were mixed on Monday, showing resilience to news of a failed coup attempt in Turkey where more than 6,000 were arrested within the military and law enforcement. Turkey’s BIST 100 index was down 4.8% by midsession.
Turkey’s central bank pledged to provide unlimited liquidity, which helped take pressure off the lira, and USDTRY reversed half of its late Friday’s gains today.
SoftBank is to buy UK chip designer ARM Holdings for $32 billion or a 42% premium to its Friday closing price.
- US July NAHB housing market index (1400)
- US May total net TIC flows (2000)
FX majors have reversed most of their late Friday moves since European markets opened this morning.
USDJPY: gapped earlier on open, reaching highs at 106.02 and consolidated within a range of 105.55-75 since. news that the Turkish government forces got the situation under control and the central bank's pledge to add unlimited liquidity saw TRY reverse half of its Friday losses against majors, especially EUR and USD. This is an important week for GBP data, with CPI due tomorrow, jobs data on Wednesday and retail sales on Thursday. Vols are trading a bit lower in G10 pairs so far today. TRY vols opened higher on the back of the military coup, with 1m at-the-money trading at 12-13 vols vs 9.25 Friday before the coup.
FX Options volatilities
Government bonds are back to winning ways after posting their worst week of performance in the year last week in yield terms, which took the German 10-year yield all the way back into positive territory. At present, the yield has dipped back below zero.
Corporate bonds are seeing very little action, and liquidity in an increasingly holiday-stricken European market. Turkey remains in focus, with a modest selloff seen across the curve in TRY bonds as well as international bonds to a lesser extent. The Turkey 2045 in USD is currently three full points lighter at an indicative level of 121, equal to a 5.2% yield.
European stock indices were broadly unchanged, while S&P 500 index futures traded up 0.2% from Friday’s close as traders eyed earnings releases from Bank of America, Yahoo and Netflix all due out later today.
Turkey’s Borsa Istanbul index was 5% lower and Turkish Airlines down 6.5% after a failed coup attempt late on Friday evening.
Meanwhile in London, shares in ARM Holdings surged 43% after news that SoftBank will buy the company for a reported $32 billioln. Other constituents of the semiconductor sector also rallied on the news, Dialog Semiconductor and Ams AG both up 3.6%.
The replay of our Morning Call can be found here.
Mid-session Europe is part of TradingFloor's stable of commentary running through from the US close, through Asia to the European session. Click below to keep abreast of all the developments as they happen.
Turkey reeled from a failed coup attempt. Photo: iStock
— Edited by John Acher