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An employee watches a news broadcast on the trading floor at the Borsa Istanbul stock exchange in Istanbul, Turkey, on Monday, June 25, 2018. The gains in Turkey’s lira that followed Recep Tayyip Erdogan’selection victory fizzled out as investors worried that the president’s sweeping new powers may stymie efforts to rein in inflation and the widening current-account deficit. Photographer: Kostas Tsironis/Bloomberg(bloomberg)
(Bloomberg) -- Stocks sold off around the world, with U.S. equities erasing what would’ve been a sixth weekly gain as Turkey’s economic crisis deepened. The dollar capped its best week since June as the lira sank to a record.
The S&P 500 Index slumped in thin trading, zapping gains that had taken it within striking distance of an all-time high. European and emerging-market equities bore the brunt of selling, with losses of more than 1 percent after the U.S. escalated a diplomatic row that tipped Turkey’s economy deeper into crisis.
The 10-year yield slid below 2.9 percent as price data reinforced the Federal Reserve’s rate-hike intentions and investors sought havens. A government report on agriculture stocks sent soybean, cotton and wheat futures tumbling. Oil settled above $67 a barrel.
Geopolitical tensions between the U.S. and other countries set the tone for markets this week, with a speech from President Recep Erdogan doing little to quell investor angst that Turkey’s crisis will spread to other economies. The Trump administration doubled tariffs, exacerbating the issue.
Earlier in the week, China responded to the Trump administration’s trade war volley with additional tariffs of its own. The ruble fell the most since the 2015 oil shock after the U.S. announced new sanctions on Russia over a nerve-agent attack in the U.K. Amid it all, Elon Musk roiled Tesla Inc.’s shares with a tweet signaled he’d take the firm private. The stock ended lower than where it was at the time of the missive.
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These are the main moves in markets:
- The S&P 500 fell 0.7 percent as of 4 p.m. in New York. It dropped 0.25 percent on the week.
- The domestically focused Russell 2000 Index slipped 0.3 percent.
- The Stoxx Europe 600 Index sank 1.1 percent.
- Germany’s DAX Index lost 2 percent.
- The MSCI Emerging Market Index fell 1.7 percent.
- The MSCI Asia Pacific Index dipped 1 percent.
- The Bloomberg Dollar Spot Index jumped 0.7 percent to the highest in more than six weeks on the largest climb in a month.
- The euro sank 1 percent to $1.1410, the weakest in 13 months on the biggest dip in more than two weeks.
- The Japanese yen climbed 0.2 percent to 110.852 per dollar.
- The Turkish lira decreased 14 percent to 6.46 per dollar, the weakest on record with the largest tumble in more than 17 years.
- The yield on 10-year Treasuries sank five basis points to 2.87 percent.
- Turkey’s 10-year surged 15 basis points to 20.34 percent.
- Germany’s 10-year yield fell four basis points to 0.33 percent.
- Italy’s 10-year yield increased nine basis points to 2.986 percent.
- West Texas Intermediate crude increased 1.2 percent to $67.63 a barrel.
- Gold futures decreased 0.1 percent to $1,219.20 an ounce.
- Corn, cotton and wheat futures slumped more than 2.3 percent.
--With assistance from Sheldon Reback, Ruth Carson, Adam Haigh and Yakob Peterseil.
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