Opening Bell: Turkish Contagion Fears Plague Global Markets; USD, Yen Jump
Investing.com | Aug 13, 2018 06:30
-
Turkey's central bank fails to boost lira after Erdogan’s defiant speech
-
Investors sell off equities, EM FX on contagion fears, rotate into USD, yen, Treasurys
-
WTI prices fluctuate between contrasting themes
h2 Key Events/h2 -
Earnings continue this week with:
-
Home Depot (NYSE:HD), due tomorrow before market open, $2.84 EPS forecast VS $2.25 for same quarter last year.
-
Cisco (NASDAQ:CSCO), due Wednesday after market close, $0.63 EPS forecast, VS $0.55 percent for last year’s same quarter.
-
Walmart (NYSE:WMT), due Thursday before market open, $1.21 EPS forecast VS $1.08 for the same quarter a year earlier.
-
China releases industrial production, fixed-asset investment and retail sales data on Tuesday.
-
Canadian ADP Nonfarm Employment Change is released Thursday.
-
Canadian Manufacturing Sales for June are released Thursday.
-
Brexit talks between the EU and the UK resume in Brussels on Thursday. EU officials are looking at September as the decisive deadline, while UK Prime Minister Theresa May favors a late-fall deadline.
-
Australian central bank's Governor Philip Lowe testifies before Economics Committee on Friday.
Global stocks sold off alongside futures on the S&P 500, Dow and NASDAQ 100 on Monday, as investors fret over contagion risks from Turkey's economic crisis and sought refuge in the dollar, the yen and US Treasurys.
The Turkish central bank's intervention to boost liquidity, which comes after President Recep Tayyip Erdogan's defiant speech on Friday, fell short of sparing the lira from hitting a fresh record low—its seventh within the last eleven sessions—as fears over the country's fiscal and current accounts deficit deepened. Erdogan had recently pressured policymakers to keep interest rates low, even the inflation hit a staggering 16 percent growth rate in July.
The STOXX 600 dropped 0.4 percent to a three-week low in early European trade and the Dow Jones EURO STOXX Banks lost 1.41 percent to a six-week low, both dragged lower by European banks' exposure to Turkish risk. Spain's bank BBVA, Italy's UniCredit and France's BNP Paribas were down 3.49, 3.37 and 1.07 percent respectively at 10.33am GMT.
Earlier, during the Asian session, Turkish uncertainty spread to neighboring markets, replacing US-China trade war worries and weighing down on regional shares. Japan's TOPIX was the main laggard, plunging more than 2.13 percent after opening with a falling gap. The index stands half-percent of the July trough.
Hong Kong’s Hang Seng shed 1.52 percent while China's mainland index, the Shanghai Composite, held stronger, losing 0.34 percent. South Korea’s KOSPI slipped 1.5 percent. Australia's S&P/ASX 200 outperformed its regional peers, in line with its recent trend, retreating 0.42 percent.
h2 Global Financial Affairs/h2US majors sold off Friday, giving up their chance to seal a sixth consecutive weekly advance. The S&P 500 slid 0.71 percent, led by Materials (-1.44 percent), the sector most directly impacted by tariffs headwinds. The only bright spot was Energy (+0.61 percent), which tracked the price of crude higher.
The Dow Jones Industrial Average dropped 0.77 percent and the NASDAQ Composite retreated 0.67 percent. Domestic stocks listed on the Russell 2000 outperformed their larger-cap counterparts, with the index limiting losses to 0.24 percent.
In FX markets, contagion worries sent emerging markets currencies lower. The South African rand hit its lowest intraday level since 2008, when investors rushed to the US dollar. Interestingly, investors have shunned gold as a safe haven for some time now, due to rising interest rates in the US.
Get The App
The Canadian loonie was down 0.12 per cent against the U.S. greenback early Monday, trading at 0.7602.
The Dollar index reached 96.50, a yearly high, extending an upside breakout to a bullish ascending triangle, where demand has been outpacing supply.
The price of oil has been swinging between gains and losses amid ongoing fears of Iranian supply glitches on one side and signs of a potential increase in American output on the spreading Turkish crisis. WTI crude jumped about 1.25 percent on Friday after it reached an uptrend line since mid-February.
h2 Up Ahead/h2Bonds
Canada’s 10-year yield was down early Monday at 2.286, a 0.69-percent decrease.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.