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Pandemic Binge Helped Turkish Economy Outperform Most Peers – Bloomberg

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Turkey’s economy outperformed all but one major competitor in the final quarter, as rate cuts and a spending-and-credit binge beat back pandemic restrictions even as the lira collapsed.

Gross domestic product rose 5.9% from a year earlier, more than all G-20 nations except China. The median of 20 forecasts in a Bloomberg survey was for 6.9% growth. The seasonally and working day-adjusted figures showed an expansion of 1.7% in the last quarter from the previous three months. The economy grew 1.8% in 2020.

The growth push weakened the currency by 20% in 2020 and kept headline inflation in double digits for the entire year. The data expose the challenge facing central bank Governor Naci Agbal as he looks to cool growth and restore price stability without triggering a steep slowdown in activity and a jump in unemployment.

The government had pushed banks to ramp up lending to help businesses and consumers ride out the Covid emergency. The credit boom was coupled with a front-loaded easing cycle that helped prime the economy.

#lazy-img-368962288:beforepadding-top:56.25%;Turkey's industrial output has been rising on an annual basis since June

Agbal raised the benchmark interest rate by a cumulative 675 basis points to 17% following his appointment in November, signaling a return to more market-friendly monetary policy. The lira has strengthened 15% since his appointment.

The International Monetary Fund raised its growth forecast for Turkey’s economy to 6% in 2021 amid the coronavirus vaccine rollout, while warning the pandemic response worsened pre-existing financial risks despite leading to a strong rebound in economic activity.

“With some stability in the currency market, Turkish exporters can finally enjoy the price competitiveness accumulated over recent years,” said JPMorgan Chase & Co.’s London-based analyst Yarkin Cebeci. “Depending on the pace of vaccinations, tourism will most probably be stronger than last year as well.”

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    Economy

    Toronto Stock Exchange futures point to lower open as crude weakens

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    Toronto Stock Exchange

    Futures for Canada‘s main stock index fell on Monday, tracking weakness in crude prices, while sentiment across global markets was subdued on inflation pressures.

    Brent crude and U.S. West Texas Intermediate (WTI) crude were both down 0.17%. [O/R]

    June-quarter futures on the S&P/TSX index were down 0.48% at 7:00 a.m. ET.

    Securities Foreign data for March is due at 8:30 a.m. ET.

    The Toronto Stock Exchange’s S&P/TSX composite index ended 1.21% higher at 19,366.69 on Friday.

    Dow Jones Industrial Average e-mini futures were down 0.39% at 7:00 a.m. ET, while S&P 500 e-mini futures had lost 0.34% and Nasdaq 100 e-mini futures were down 0.38%.

    TOP STORIES [TOP/CAN]

    Canada‘s Centerra Gold said on Sunday it had initiated binding arbitration against Kyrgyzstan government, after the parliament passed a law allowing the state to temporarily take over the country’s biggest industrial enterprise, the Kumtor gold mine operated by Centerra.

    ANALYST RESEARCH HIGHLIGHTS [RCH/CA]

    Bombardier: ATB Capital Markets raises to “speculative buy” from “sector perform”

    Pan American Silver: National Bank of Canada raises to “outperform” from “sector perform”

    SNC-Lavalin Group Inc: RBC raises target price to C$40 from C$33

    COMMODITIES AT 7:00 a.m. ET

    Gold futures: $1,850.4; +0.67% [GOL/]

    US crude: $65.27; -0.17% [O/R]

    Brent crude: $68.59; -0.16% [O/R]

    U.S. ECONOMIC DATA DUE ON MONDAY

    0830 NY Fed Manufacturing for May: Expected 23.90; prior 26.30

    1000 NAHB Housing Market Index for May: Expected 83; prior 83

    FOR CANADIAN MARKETS NEWS, CLICK ON CODES:

    TSX market report [.TO]

    Canadian dollar and bonds report [CAD/] [CA/]

    Reuters global stocks poll for Canada

    Canadian markets directory

    ($1= C$1.21)

     

    (Reporting by Amal S in Bengaluru; Editing by Vinay Dwivedi)

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    Economy

    Britain’s pension fund USS invests 225 million euros in Spanish renewables

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    British private pension fund Universities Superannuation Scheme (USS) said on Monday it has invested 225 million euros ($273 million) to take a 50% stake in Bruc Energy, which develops renewable energy projects in Spain and Portugal.

    The inflow of cash into renewables in the Iberian peninsula is an encouraging sign for the industry after recent setbacks.

    Renewable power group Opdenergy shelved an initial public offering two weeks ago citing “unstable conditions in markets” and shares of rival Econener plummeted 15% on their first day of trading a few days earlier.

    Bruc Energy, which was created in Spain by Canadian pension fund OPTrust and Spanish businessman Juan Bejar, is planning to develop solar projects in Spain and Portugal for a total potential capacity of 4,000 megawatts.

    “The long-term nature of solar and the steady returns make renewables attractive to a pension scheme needing to pay pensions for years to come”, Gavin Merchant, USS’s co-head of direct equity, said in a statement.

    The transaction was advised by Royal Bank of Canada (RBC), Greenhill and Nomura.

    ($1 = 0.8229 euros)

     

    (Reporting by Cristina Galán, editing by Inti Landauro and Emelia Sithole-Matarise)

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    Canadian dollar moves to extend weekly win streak as oil rebounds

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    Canadian dollar

    The Canadian dollar strengthened against its U.S. counterpart on Friday and was on track for its seventh straight weekly gain as oil prices rose and domestic data added to evidence of robust economic growth in the first quarter.

    Canadian factory sales rose 3.5% in March from February, led by the motor vehicle, petroleum and coal, and food product industries, while wholesale trade was up 2.8%, Statistics Canada said.

    The price of oil, one of Canada‘s major exports, reversed some of the previous day’s sharp losses as stock markets strengthened, though gains were capped by the coronavirus situation in major oil consumer India and the restart of a fuel pipeline in the United States.

    U.S. crude prices rose 1.2% to $64.61 a barrel, while the Canadian dollar was trading 0.6% higher at 1.2093 to the greenback, or 82.69 U.S. cents, moving back in reach of Wednesday’s 6-year peak at 1.2042.

    For the week, the loonie was on track to gain 0.3%. It has climbed more than 5% since the start of the year, the biggest gain among G10 currencies, supported by surging commodity prices and a shift last month to a more hawkish stance by the Bank of Canada.

    Still, BoC Governor Tiff Macklem said on Thursday if the currency continues to rise, it could create headwinds for exports and business investment as well as affecting monetary policy.

    The U.S. dollar fell against a basket of major currencies, pressured by a recovery in risk appetite across markets after Federal Reserve officials helped calm concerns about a quick policy tightening in response to accelerating U.S. inflation.

    Canadian government bond yields were lower across much of a flatter curve, with the 10-year down 2 basis points at 1.549%. On Thursday, it touched its highest intraday in eight weeks at 1.624%.

     

    (Reporting by Fergal Smith; Editing by Nick Zieminski)

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