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Stocks, Euro Slip on Turkey Worries; Yen Gains


Standard Group (SDG) according to Bloomberg news on 13 August 2018 - Stocks slipped in Asia with the euro and emerging-market currencies, with Treasuries and the yen nudging higher, as turmoil in Turkey that’s sparked wider concern of potential market contagion triggered action from banking regulators.

Japanese stocks and U.S. equity futures fell, with trading set to be dominated by events in Turkey. President Recep Tayyip Erdogan maintained his defiance toward the U.S. and financial-market orthodoxy in speeches on Sunday even after the nation’s currency plummeted. The lira declined early Monday in Asia before recovering somewhat after the country’s banking regulator limited swaps transactions, triggering a slight easing to the risk-off mood in Asian trading. Money is flowing into safe-haven assets like Treasuries and the Japanese yen as the situation in Turkey raises concern over the exposure of euro-zone banks. The lira’s plunge has reminded investors of past crises in emerging markets and rattled nerves, which show little sign of calming in early Monday trading.

"As well as rising tensions in emerging markets, headlines on the simmering trade conflict keep niggling away at confidence,” said Stewart Richardson, chief investment officer at RMG Wealth Management LLP in London. "So far, the contagion from the worst emerging markets has been contained, but the performance late last week is not encouraging. The risk is that developed market assets begin to buckle and central banks ignore this and continue to tighten because they are already behind the curve.”

Here are some key events coming up this week:

  • China release industrial production, fixed-asset investment and retail sales data Tuesday.
  • Earnings are due this week from companies including India’s Tata Steel, Maersk, Home Depot, China Unicom, Tencent, Cisco, Walmart, and Carlsberg.
  • Brexit talks between the EU and the U.K. resume in Brussels Thursday. The EU is signaling it wants to make September a decisive month in the divorce negotiations, while U.K. Prime Minister Theresa May favors a late-fall deadline.
  • Australian central bank Governor Philip Lowe testifies before Economics Committee on Friday.
These are the main moves in markets:

Stocks

  • Japan’s Topix index slid 1.1 percent as of 9:20 a.m. in Tokyo.
  • South Korea’s Kospi index lost 0.6 percent.
  • Futures on Hong Kong’s Hang Seng Index dropped 0.7 percent.
  • Australia’s S&P/ASX 200 Index sank 0.3 percent.
  • Futures on the S&P 500 Index were down 0.2 percent. The underlying gauge fell 0.7 percent Friday.
Currencies

  • The Japanese yen climbed 0.2 percent to 110.62 per dollar.
  • The euro sank 0.2 percent to $1.1395.
  • The lira was quoted at 6.84 per dollar. It’s down about 40 percent this year.
  • The offshore yuan was steady at 6.8722 per dollar, after dropping 0.3 percent Friday.
  • The Bloomberg Dollar Spot Index rose 0.1 percent after climbing 0.7 percent Friday.
Bonds

  • The yield on 10-year Treasuries slid one basis point to 2.86 percent.
  • Australian 10-year government bond yields fell one basis point to 2.58 percent.
Commodities

  • West Texas Intermediate crude increased 0.2 percent to $67.77 a barrel.
  • Gold futures was steady at $1,209.87 an ounce.