EUROPE MARKETS: European Stocks Close Little Changed; Turkey's Lira Stabilizes
August 14 2018 - 1:00PM
Dow Jones News
By Mark DeCambre, MarketWatch
European stocks ended essentially at the flat line Tuesday, but
with enough of a move to mark the first advance in three sessions,
as Turkey's currency meltdown showed signs of steadying.
What are markets doing?
The Stoxx Europe 600 finished virtually unchanged at 384.92,
rising less than a point after shedding 0.3% on Monday
(http://www.marketwatch.com/story/european-stocks-drop-as-investors-remain-focused-on-turkey-2018-08-13)
amid escalating worries about Turkey's plunging lira. The index
shows a decline of 0.2% so far this week and a 1.1% retreat so far
in 2018, according to FactSet data.
Germany's DAX 30 ended at break-even levels at 12,358.87,
tacking on less than a point, after closing Monday's session down
0.5%, while France's CAC 40 declined 0.2% to 5,403.42, following a
decline of about 0.1% in the previous session. The U.K.'s FTSE 100
, meanwhile, finished with a loss of 0.4% to 7,611.64, after a 0.3%
fall on Monday, as a decline in miners weighed on the
benchmark.
All of the European benchmarks finished the session off their
best levels.
The euro traded at $1.1345, slipping from $1.1411 late Monday in
New York.
What is driving the market?
European bourses turned higher early Tuesday as investors
attempted to shake off worries about the deterioration of Turkey's
currency, and a possible spillover to other markets. Tentative
buying emerged on the back of healthy economic reports.
Meanwhile, the Turkish lira rose nearly 5% against the dollar on
Tuesday
(http://www.marketwatch.com/story/turkeys-lira-rallies-vs-the-dollar-on-tuesday-2018-08-14)
after a withering series of drops to historic lows against the U.S.
dollar. The slide has roiled global markets. The lira crisis,
kicked off partly by reports by the Financial Times (paywall)
(https://www.ft.com/content/51311230-9be7-11e8-9702-5946bae86e6d),
that the European Central Bank was concerned about contagion from
Turkey's currency slide to eurozone financial firms, took a turn
for the worst after U.S. President Donald Trump on Friday said he
authorized the doubling of steel and aluminum tariffs on
Ankara.
One dollar bought 6.5463 lira, compared with 6.8846 late Monday
in New York and one euro changed hands at 7.4645 lira , versus
about 7.9079 lira in the previous session, a gain of decline of
about 5.5% against the euro.
Trump's representatives on Monday told Turkey's ambassador that
negotiations between the nations cannot move forward to remove
sanctions against Ankara until detained evangelical pastor Andrew
Brunson is released from the country.
A report on expansion
(http://www.marketwatch.com/story/germanys-economy-sped-up-in-second-quarter-2018-08-14)
in Germany showed that Europe's second-largest economy saw growth
of 0.5% in the second quarter, with an annualized rate of 1.8%.
However, the report indicated that global trade tensions and
Turkey's currency crisis are clouding the business outlook.
Don't miss:A top London startup's CEO flags the biggest Brexit
threat to his industry
(http://www.marketwatch.com/story/a-top-london-startups-ceo-flags-the-biggest-brexit-threat-to-his-industry-2018-08-06)
What are strategists saying?
"Investors are becoming increasingly worried about how the
Turkish crisis would spread into other markets after yesterday's EM
currencies and equities selloff. So far, I think the risk of
contagion is limited and yesterday's selloff was due more to a
risk-off mood than a fundamental reason," wrote Hussein Sayed,
chief market strategist at FXTM, in a Tuesday research note.
"However, economies with large current account deficits such as
India, Argentina and South Africa will come under increased
economic pressure as the Fed continues to tighten monetary policy,"
he added.
Stock movers
Shares of Antofagasta PLC(ANTO.LN) fell 7.1% after the company
reported quarterly results
(http://www.marketwatch.com/story/antofagasta-posts-profit-drop-backs-outlook-2018-08-14),
with a decline in profit. The copper miner was the worst performer
on the pan-European benchmark.
Symrise AG's stock was the best performer on the Stoxx Europe
600, gaining 4.9% after the company reported upbeat quarterly
results.
(END) Dow Jones Newswires
August 14, 2018 12:45 ET (16:45 GMT)
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