A plethora of disturbing headlines all week long from the UK, Russia, and Turkey have resulted in a wild Friday for the global markets.
Turkey is leading the pack in the media hailstorm as the chaos on Friday ensues with their currency plummeting to a record low against the USD. A diplomatic tussle between the US and its NATO ally got worse on Friday after President Trump said he had authorized doubling the sanctions on Turkey’s steel and aluminum products.
The complete and utter pandemonium in Turkey is aiding to fears over what exactly will happen with the Eurozone. This in turn has caused a sell-off in banks and other assets in the region.
“The plunge in the lira which began in May now looks certain to push the Turksih economy in to a recession and it may well trigger a banking crisis,” Andrew Kenningham, the chief global economist at Capital Economics, said on Friday in a not.
These fears ended up spilling into the US market on Friday, as investors started moving their focus away from solid corporate earnings back to the what was happening globally. The Dow Jones was down 229 points, or 0.9% at 10:12 a.m. ET, while the s&P 500 was also down 19 points (0.67%). Meanwhile, the tech laden Nasdaq was also down 59 points (0.8%), and before that had been set to continue on an 8 day winning streak that was brought to a sudden end today.
What you Need to Know:
Turkey is currently in utter turmoil and chaos and the Turkish officials are failing to persuade the US to life the sanctions, plunging the lira to new lows this week. The currency’s fall depended early on Friday, after a report from the Financial Times that the Eurozone’s biggest lenders would be affected by crisis in Turkey.
The lira then continued to fall even further as Erdogan delivered a crazy speech to his supporters regarding the plunging currency, encouraging Turkish citizens to buy it up.
“Don’t forget, if they have their dollars, we have our people, our God,” he said.
The final punch came to the lira following Erdogan’s wild speech, when Trump went on to tweet that he had “just authorized a doubling of tariffs on steel and aluminum with respect to Turkey.”