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Turkey continues to hurt Global markets – U.S. & European stocks lower; Gold breaks below 1200 on USD rally; Risk fights back to JPY

Aug 14, 2018 | Market Updates

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Markets continued lower overnight as issues in Turkey dragged on.  “Turkey’s problems are so big that they will require something very special to short-circuit the crisis,” says Jose Luis Daza, chief investment officer at QSR Capital Management.

The Dow Jones lost 125.44 points, Goldman Sachs and J.P. Morgan both falling more than 1%. The Dow posted its fourth straight day of losses, its longest losing streak since June.

The S&P 500 lost 0.4% as materials and energy lagged, posting its first four-day losing streak since March. The Nasdaq Composite fell 0.25%, but gains in Amazon and Apple added 1% which kept losses in check.

Materials lost 1%, led lower by shares of Mosaic, which fell 3.6%. Energy shares also fell 1.2% as US crude prices fell to 7-week lows.

“Investors are generally going to be more cautious with a story like Turkey out there,” said Jennifer Ellison, principal at BOS. “It’s going to hold people off from taking significant risk for a short period of time … but if you take a step back and look at the bigger picture, things are good.”

The Turkish lira, at one point lost up to 20% during Friday’s session, reached a fresh record low on Monday before paring some losses. Turkey’s central bank tried to assure global investors’ fears on Monday, stating it will provide as much liquidity as needed to the country’s banks. The central bank also said it will keep monitoring the situation closely. The Turkish economy has been reeling recently as its inflation rate reached 16% last month, well above the central bank’s 5% target. – CNBC

Shares in Europe continued lower but loses where lower than Friday’s rout. The FTSE -24.56, the DAX -65.61 and the CAC just edged into the red losing 2.36 pts. Issues from Turkey continues to keep investor confidence low. Bayer lost 10.3% after parent company Monsanto was to have found to have advised cancer risks in its product roundup.

Oil traded in a volatile session tanking to new monthly lows at 65.15, before paring losses to end the session at 66.77. Traders could keep an eye on 66.15 as it continues as a low from the daily USOUSD chart.

Gold which looked to be in demand Friday was hit hard by a higher USD, prices hitting new low’s not seen since 2017. Gold dropped below 1200 hitting a session low of 1191.65. Price closed at 1193.33 a new 2018 low.

The risk majors all put in new monthly lows to the USD. The EUR and AUD putting in solid opening lower gaps. Buyers did return late in the session. The GBP and EUR closed in the positive to the USD but the AUD lost 10 pips cementing its new move back into the .72s. The USD added 22 pips after hitting new AUG lows. Risk fought back to the Yen, the AUD, EUR and GBP ending higher. After Friday’s wash out the EUR closed higher on most crosses. These might be value buys as the issues in Turkey will still keep investor and trader confidence low and any new flare-ups will most likely rattle buyers again.

Bitcoin failed to hold its rally yesterday falling away late into the session. Price dropped 321 USD back to 6147, buyers continue to hold from 6140 but buyer confidence continues to look weak. Price is slightly higher this morning at 6233.

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Sources; CNBC – All times are AEST

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