Turkey’s problems with its economy and currency continues to hang over global markets.
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Turkey’s lira plunged 10% overnight, before pulling back from that record low after the central bank pledged to provide liquidity and cut lira and foreign currency reserve requirements for Turkish banks.
Dow Jones futures were down 0.32%. The S&P 500 slipped 0.30% and the Nasdaq Composite was off 0.37%.
The announcement came after Finance Minister Berat Albayrak said authorities would start implementing an economic action plan on Monday morning.
The currency has lost more than 40 percent against the dollar this year, largely over worries about President Tayyip Erdogan’s influence over the economy, his repeated calls for lower interest rates, and worsening ties with the United States.
“Turkey’s GDP is much bigger than Greece, but their debt is relatively low comparatively and the economy is more diversified, said Jonas Ferris, co-founder of MAXfunds.com, in a statement to FOX Business. “That is also why they are at risk because some of this is Trump piling on and using Turkey as proof how tough he is.”
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Stocks slipped on Friday as financial concerns developed in Turkey and Russia.
The Dow Jones Industrial Average dropped 196.09 points, or 0.77%, to 25,313.14. The S&P 500 was down 20.3 points, closing at 2,833.28. The Nasdaq Composite fell 52.67 points, or 0.67%, to 7,839.11.
| Ticker | Security | Last | Change | %Chg |
|---|---|---|---|---|
| I:DJI | DOW JONES AVERAGES | 25313.14 | -196.09 | -0.77% |
| SP500 | S&P 500 | 2833.28 | -20.30 | -0.71% |
| I:COMP | NASDAQ COMPOSITE INDEX | 7839.1099 | -52.67 | -0.67% |
Friday’s drop in the Lira, came after a report that the European Central Bank is growing more concerned about exposure of regional banks to Turkey.
The ECB has concerns specifically about banks in Spain, Italy and France and their exposure to Turkey’s woes, the Financial Times reported Friday.
“The situation in Turkey will not have much of an effect on the U.S. economy. Turkey is not a particularly important trading partner,” said Marc Lichtenfeld to FBN. He’s Chief Income Strategist at The Oxford Club. “The threat to investors is that other emerging markets sell off. Investors should only adjust their portfolios if they are heavily overweighted emerging markets.”
In Asian market trading on Monday, China’s Shanghai Composite Index closed down 0.3%.
Hong Kong’s The Hang Seng index finished the session 1.5% lower.
Japan’s Nikkei closed the day down 1.98%.
Banks dragged European shares down on Monday as a growing economic crisis in Turkey shook investor confidence in lenders exposed to the country.
London’s FTSE was down 0.56%, Germany’s DAX fell 0.65% and France’s CAC was off 0.36%.
In the U.S. this week, a large focus will be on the retail sector as a monthly report on sales is scheduled, plus earnings reports will be released from sector giants Walmart, Home Depot and Macy’s.
In Friday’s economic data, a reading on inflation was in line with forecasts. The Labor Department said its Consumer Price Index advanced 0.2%, the bulk of which was due to a rise in the cost of shelter. CPI rose 0.1% in June. In the 12 months through July, the CPI increased 2.9%, matching the increase in June
FOX Business’ Leia Klingel contributed to this article.
