Before the bell: Turkey Causes Volatility

The U.S. Federal Reserve kept interest rates unchanged yesterday, but in Turkey, President Erdogan triggered a sell-off in the local financial markets.

It wasn’t the U.S. interest rate decision that made the biggest headlines yesterday, but rather Turkish President Erdogan. The arrest of a political rival caused the Turkish stock market to drop nearly 9%, while the German 10-year bond yield briefly fell by 6 basis points in the morning. Calm later returned to Western markets, shifting the focus back to the U.S. interest rate decision. There wasn’t much news to report there—the Federal Reserve kept rates stable and confirmed that it will likely cut rates only twice this year. U.S. markets responded positively, with the S&P 500 gaining 1.1% and the Nasdaq rising 1.4%. Meanwhile, in Asia, the Chinese central bank also kept its key interest rates unchanged today.

On the corporate front, today is a relatively quiet day. Following the U.S. Federal Reserve meeting, central banks in the UK, Sweden, and Switzerland will also announce their rate decisions. This evening, we’ll be looking out for the earnings reports from the holding company Brederode, as well as Accenture, Micron, and FedEx.

Is the German Chemical Sector Worth Investing In Again?

Have you heard of the German company Lanxess? It might ring a bell for Bayer shareholders. The German chemical giant was part of the Bayer Group until 2004, when it was spun off because its chemical operations no longer fit within Bayer’s core business. The German chemical sector has been struggling for some time, but in that context, Lanxess’s latest earnings report was encouraging. The EBITDA before exceptional items increased by 19.9% to 614 million euro, and the company generated a strong free cash flow of 188 million euro, thanks to its recent restructuring plan. 2025 should bring further improvement, with EBITDA expected to reach between 600 and 650 million euro, with the potential for further profit growth. Additionally, since the company plans to sell a division in the first quarter, this suggests that EBITDA growth in its remaining businesses could be around 10%—and that’s even before the German stimulus plan takes effect. Maybe it’s time to take another look at the German chemical sector?

Is a Recession Coming?

In recent weeks, the “R-word” has been frequently mentioned among investors. Soft economic indicators, such as U.S. consumer confidence, have raised concerns. However, consumer confidence is just a sentiment—what analysts really focus on are hard data, such as home sales and corporate spending. And those numbers have actually held up well over the past month. That was also the message subtly conveyed by the Federal Reserve yesterday. Fed Chair Powell acknowledged that the economy is slowing but projected a growth rate of 1.7% for 2025 (down from the previous forecast of 2.1%) and 1.8% for 2026. This means a recession is still a distant concern, which should reassure investors.

Did You Know…

that the Turkish population has seen its international purchasing power collapse over the past five years? Five years ago, a Turkish citizen could buy one euro for 7 Turkish lira. Today, that same euro costs 41 Turkish lira.

This article was translated from Dutch and was originally published on Spaarvarkens.be.