Turkey contagion hits Europe
The FTSE opened lower this morning catching the contagion from a free-fall in the Turkish lira and the Russian rouble which are affecting the euro, banking stocks and large Russian London-listed companies.
Share this:
The Turkish lira went into a free-fall overnight, declining by more than 10% to trade at around 6 against the dollar, as the country teeters on the edge of a balance of payment crisis and faces political pressure from Washington over the detention of a US pastor. The move was further exaggerated by reports that the European Central Bank is increasingly worried about the exposure of European banks to Turkey.
The turmoil in the currency market didn’t stop there. Asian markets declined, most prominently the Nikkei which fell 1.3% and European bourses all opened lower as investors started ditching higher risk assets to look for safe haven buys such as US bonds. The euro hit the lowest level against the dollar in over a year.
Rouble, rouble
In London, shares in Russian steel maker Evraz plunged 7.42% as the latest set of US sanctions against Russia are beginning to bite. The US said Thursday it would penalise Russia for its involvement in the attempt on the life of its former spy Sergei Skripal with a new set of trade restrictions causing the rouble to tumble and Russian companies to be sold off on Western markets. Other miners were also under pressure as gold and copper prices dropped overnight. Anglo-South African gold producer Anglo American, Chilean copper miner Antofagasta and gold producer Rangold are all trading between 2.35% and 2.68% lower.
House of Fraser in administration
A number of retail chains have gone into administration this year including the likes of Carpetright and Mothercare, with Homebase struggling to avoid this fate. On Friday upmarket retailer House of Fraser joined the sorry line-up saying that it has appointed administrators after giving up the fight to save the business. HoF’s reasons for closure are the same as for the less glamourous labels – competition from internet sales, too many stores and not enough physical visitors. The company’s future now lies in the hands of administrators Ernst & Young who are trying to find a buyer to save the struggling chain.
Open an account in minutes
Experience award-winning platforms with fast and secure execution, and enjoy tight spreads from 0.5 pts on FX and 0.3 pts on indices.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
Gold Forecast: Are Bears Regaining Control of XAU/USD?
The start of the trading week has not been particularly favorable for gold. This can be seen in recent XAU/USD price action, with the metal falling nearly 4.00% over the last two trading sessions and bringing renewed attention to a bearish bias within the market.
Gold outlook: XAU/USD hammered, stretched and vulnerable to a sharp rebound
Gold is getting hammered for solid fundamental reasons, but history suggests extreme four-hourly oversold conditions can produce violent countertrend rallies.
EUR/USD, USD/JPY Outlook: Oil, yields and an FX identity crisis
Crude oil is setting the tone across rates and FX, leaving EUR/USD vulnerable and USD/JPY caught between higher Treasury yields and the growing threat of intervention
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.forex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.