Friday August 10th

10-08-2018

Dow set to slide 100 points on geopolitical concerns as Turkish lira plunges

U.S. stock index futures fell deep into the red ahead of Friday's open, following negative sentiment in markets overseas. Around 7:10 a.m. ET, Dow Jones Industrial Average futures dropped 102 points, indicating a negative open of -102.23 points, with the S&P 500 and Nasdaq 100 futures also pointing to a downbeat start to the day. Turkish President Recep Tayyip Erdogan told his country "there are various campaigns being carried out" against Turkey, helping send the lira to a fresh all-time low against dollar. Erdogan made his comments after the U.S. announced on Aug. 1 sanctions on Turkey's justice and interior ministers, prohibiting U.S. citizens from doing business with them. The move by the U.S. comes as Turkey refuses to free Andrew Brunson, an American evangelical pastor that was detained in 2016 on accusations of trying to overthrow the government after a failed coup earlier that year. The U.S. remains embroiled in a trade dispute with China, meanwhile on Wednesday the States announced that it planned to inflict sanctions on Russia over its alleged chemical poisoning of an ex-spy in England earlier this year. Russia's Prime Minister Dmitry Medvedev warned the States on Friday that enacting these sanctions could be treated as a declaration of economic war, according to Reuters. Consequently, investors have been keeping a close eye on the Russian ruble. Likewise, investors continue to monitor trade tensions between Washington and Beijing. This week both governments announced the possibility of imposing tit-for-tat tariffs on an additional $16 billion worth of goods. Friday's drop comes a day after the Nasdaq Composite scored its longest winning streak in close to a year, boosted by positive trade out of tech stocks including Amazon and Apple. In economic data, the consumer price index rose 0.2% in July; a reading of core prices rose by the same amount. Followed by the Monthly Treasury Statement at 2 p.m. ET. Asian stocks closed lower on the last trading day of the week as uncertainty over U.S.-China trade relations lingered. Japan's Nikkei 225 fell 1.33 percent, or 300.31 points, to close at 22,298.08, with miners and shipping sector stocks leading overall declines. Elsewhere, the Kospi pulled back by 0.91 percent to end at 2,282.79 as major technology names dragged the index lower. Chinese equities finished higher, bucking the overall downward trend in the region. The Shanghai Composite closed 0.04 percent higher at 2,795.44. The smaller Shenzhen Composite gained 0.69 percent for the day and the blue-chip CSI 300 rose 0.22 percent. Hong Kong's Hang Seng Index pulled back by 0.9 percent by 3:05 p.m. Oil prices rose on Friday as concerns that a global trade dispute will slow economic growth and demand for fuel were balanced by U.S. sanctions against Iran that look set to tighten supply. "Sentiment is sandwiched between fears that a U.S.-China trade dispute will hurt oil demand and looming Iranian supply shortages," said Stephen Brennock, analyst at London brokerage PVM Oil Associates. Benchmark Brent crude oil was up 50 cents a barrel at $72.57 by 8:37 a.m. ET (1237 GMT), but remained on pace for a roughly 1 percent loss for the week. U.S. light crude was 44 cents higher at $67.25 a barrel, on pace for a weekly tumble of more than 1.5 percent. Gold prices dipped in Asia on Friday, languishing near a one- year low, weighed down by a rally in the U.S. dollar amid heightened global political tensions. Spot gold shed 0.5 percent to $1,206.29 an ounce at 0618 GMT, hovering close to its one-year low of $1,204 hit last week. The metal was also on track to post a fifth weekly decline.