Worry over Turkey thumps stocks

NEW YORK — Stocks in the United States and Europe skidded Friday as investors worried about the financial stability of Turkey and how it might affect the global banking system.

Turkish President Recep Tayyip Erdogan has accumulated more and more control over the country’s central bank as well as its financial system, which is now run by his son-in-law. Its currency is plunging and Turkey is also in a diplomatic spat with the United States, a major trading partner.

Alex Dryden, global markets strategist for JPMorgan Asset Management, said Erdogan showed no signs of changing course Friday, and investors are losing hope that Turkey’s government has the knowledge or independence needed to deal with the country’s financial problems.

The S&P 500 slid 20.30 points, or 0.7 percent, to 2,833.28. That was its worst loss in a month and ended a five-week winning streak for the index by wiping out its gains from earlier this week.

The Dow Jones industrial average dropped 196.09 points, or 0.8 percent, to 25,313.14. The Nasdaq composite sank 52.67 points, or 0.7 percent, to 7,839.11. It had risen for eight days in a row.

The Russell 2000 index of smaller-company stocks took a smaller loss of 4.08 points, or 0.2 percent, to 1,686.80. The companies in that index are less reliant on exports, and the stronger dollar makes their imports less costly.

While Dryden and other analysts say Turkey’s problems aren’t a major risk to the financial system, investors didn’t wait to find out Friday.

They sold stocks and bought U.S. dollars and government bonds. The bond purchases sent interest rates lower, which hurt banks. The dollar got stronger, partly because the Turkish lira nosedived, and major exporters like technology, basic materials and industrial companies sank.

Investors are concerned about Erdogan’s economic views. He says

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