Global Market Review | 13 Agustus 2018

Mirae Asset Sekuritas Indonesia Global Market
(August 13, 2018)
Investment Information Team)
(angga.choirunnisa@miraeasset.co.id)

U.S

S&P 500 logs worst day in 6 weeks as Turkey’s lira crisis spotlights global risks

The S&P 500 on Friday notched its worst daily drop since late June amid a broad global equity retreat that was fueled by a mounting currency crisis in Turkey, which has raised the alarm for possible contagion into other markets. The U.S. dollar DXY, +1.34%  viewed as a haven relative to other currencies, muscled to its firmest level in 14 months against major rivals.

The S&P 500 SPX, -0.71% lost 20.30 points to 2,833.28.  DJIA, -0.77% fell 196.09 points, or 0.8%, to 25,313.14

The U.S. dollar surged 13% against the Turkish lira USDTRY, +6.6075% According to FactSet data, the lira is down 20% this week, bringing its year-to-date slump to more than 40%.

The move that comes after the European Central Bank expressed concern about the country, where President Recep Tayyip Erdogan was re-elected in a snap vote in June and whose growing power has raised questions about the independence of the country’s central bank. The lira’s stumble prompted U.S. President Donald Trump to announce a doubling of U.S. tariffs on certain Turkish goods.

Europe

FTSE 100 ends lower as Turkey contagion angst grows, but retains slight weekly gain

U.K. stocks finished in negative territory Friday, dragged down alongside the broader European equity market, on mounting concerns that Turkey’s currency crisis will metastasize to eurozone lenders. However, London’s blue-chips index retained a slight weekly gain on the back of persistent sterling weakness. U.K. stocks were little changed after a reading of British economic growth came in line with expectations.

The FTSE 100 UKX, -0.97% fell 1% to 7,667.01

Equities across the region SXXP, -1.07% stumbled following a Financial Times report that the European Central Bank is growing more concerned about exposure of European banks to Turkey’s woes. The Turkish lira USDTRY, +6.7227%  was sent plunging to its lowest in a year against the U.S. dollar on Friday.

The euro EURUSD, -0.1753%  also dropped against the dollar “as investors feared European banks exposure to the lira. The common currency broke below the key $1.1500 support mark for the first time in more than a year. The fears also rippled to [the pound-dollar pair] which took out the $1.2750 barrier in early London dealing,” said Boris Schlossberg, managing director of FX strategy at BK Asset Management.

Meanwhile, retail stocks ended lower as upscale apparel and accessories retailer House of Fraser went into administration after a collapse in talks between the company and its creditors.