Turkish Stocks Extend Drop as Trump Threat Stokes Market Concern

(Bloomberg) -- The selloff in Turkish stocks accelerated on Tuesday with the benchmark equities gauge testing key technical levels after Donald Trump threatened the country with economic destruction in his tweets.

When the U.S. president makes such remarks, “any responsible investor is obliged to sit up and pay attention,” Julian Rimmer, a trader at Investec Bank in London, said by email. “But people are familiar with these histrionics and this posturing, so probably many will regard the threat as mostly for show.”

The Borsa Istanbul 100 Index fell as much as 2.3% before trading 1.8% lower as of 1:52 p.m. in Istanbul. Shares of Anadolu Efes and Garanti BBVA led the decline.

Trump warned Ankara that he would “totally destroy and obliterate” the Turkish economy if it takes unspecified “off limits” actions in the country’s planned Syria incursion.

• The index is testing a key 76.4% Fibonacci level and is moving toward the 50-day moving average at 100,276 points. A similar move happened on Sept. 23 and the index bounced back from the two resistance levels
• “I would anticipate and hope for a gradual de-escalation in diplomatic tension,” Rimmer said. People understand most of what the two leaders (Trump and Turkish President Erdogan) say is “intended for domestic consumption.”
• “I think the market is slowly developing immunity to Trump’s tweets now,” said Muge Koen, trader at BGC Securities. “We may see another sell-off wave in the afternoon, but we’d rather use it as a buying opportunity.”
• The lira was trading 0.1% lower as of 1:13pm in Istanbul
• READ: Trump Whipsaws on Turkey as Threat Follows Green Light on Syria
• READ: Soaring Turkish Cement Makers Not Stopping After Trump Tweets
• READ: Investors Flock to Turkey Stock ETFs in Bullish Start to October

To contact the reporter on this story: Tugce Ozsoy in Istanbul at tozsoy1@bloomberg.net

To contact the editors responsible for this story: Blaise Robinson at brobinson58@bloomberg.net, Paul Jarvis

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