Global Markets Steady After a Volatile Week
August 17 2018 - 5:55AM
Dow Jones News
By Riva Gold
-- U.S. stocks set to end the week higher
-- Shanghai Composite extends losses
-- Lira falls
Global markets were mostly steady Friday, capping a rocky week
driven by a crisis in Turkey, a selloff in Asian technology shares
and concerns about world trade.
The Stoxx Europe 600 was flat midmorning after a strong finish
on Wall Street and a small rise in Japanese and South Korean
stocks. Futures pointed to a 0.1% opening advance for the Dow Jones
Industrial Average following its biggest one-day gain in four
months.
Healthy earnings from companies like Walmart and an apparent
de-escalation of trade and geopolitical tensions have helped many
markets stabilize toward the end of the week, money managers
said.
"The corporate backdrop remains very strong in the U.S. and I
don't see that changing," said Richard Saldanha, equity fund
manager at Aviva Investors.
Still, many investors remain on edge about the situation in
Turkey and other emerging markets amid a strengthening U.S. dollar
and rising interest rates. A popular benchmark of emerging market
stocks is near bear-market territory while India's rupee is around
record lows.
Turkey's lira, a key proxy this week of stress in emerging
markets, was down 3.7% Friday, but up around 6% for the week.
The recent rebound in the Turkish currency came after Qatar
announced a $15 billion support package and the country's banking
regulator moved to limit the amount of the local currency banks can
swap for foreign currencies with counterparts.
Beyond Turkey, concerns about China's technology sector, its
currency, and trade relations between the U.S. and Beijing have
been key drivers of global markets in recent sessions.
Signs of a modest breakthrough in U.S.-China trade relations
helped markets recover Thursday after officials said they would
hold lower-level talks later this month on the trade dispute.
Still, the Shanghai Composite was down another 1.3% Friday,
deepening heavy declines from recent sessions.
Prices of commodities have also remained under pressure for most
of the week, with copper down 4.5% and Brent crude oil off 2% since
Monday. Both were little changed Friday.
"Commodities weakening tells us [investors] aren't overly
optimistic on the rebound potential of China," said Matthew Miskin,
market strategist at John Hancock Investments.
Some investors say recent policy developments have been harder
to stomach than the political uncertainties around issues like
North Korea that had previously been in focus, creating more
volatility in markets.
"Korea we thought was all noise [...] so we bought back on that"
said David Vickers, senior portfolio Manager at Russell
Investments. More recently, however, he has lightened up on equity
exposure.
"With trade, we have to be a little more circumspect because we
have the potential for a tit-for-tat race to the bottom that could
have significant ramifications for earnings."
In Hong Kong, the Hang Seng edged up 0.4% after five sessions of
losses as index heavyweight Tencent Holdings rebounded 3.4%. Shares
of the internet giant remained down roughly 9% for the week after
it reported its first year-over-year quarterly profit drop in more
than a decade.
Write to Riva Gold at riva.gold@wsj.com
(END) Dow Jones Newswires
August 17, 2018 05:40 ET (09:40 GMT)
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