Sean Burgess | PraxisIFM Asset Manager and Co-Founder Emirates HR
DEFENSIVE US STOCKS OUTPERFORM
Whilst the tech-heavy Nasdaq suffers the only loss of the major indices, with investors moving towards safe-haven sectors as relations with Turkey and other trading partners worsen. In other financial news, Donald Trump has asked the SEC to look into public companies reporting just twice a year, rather than quarterly, a move widely criticized as it could lead to less transparency for investors.
EUROPEAN STOCKS FALL ON MULTIPLE FACTORS
With the pan-European STOXX 600 index sent 1.5 percent lower by Turkey’s currency crisis, the state of European banks and general trade worries. Some of Turkey’s biggest creditors include the European banks UniCredit, BBVA and BNP Paribas, and the country’s escalating currency crisis has exposed weaknesses in these banks that has weighed heavily on their share prices.
CHINA’S YUAN LOWER FOR TENTH CONSECUTIVE WEEK
Extending its record losing streak, as the currency fell to a 20-month low midweek. On Thursday the yuan recovered some losses after the Chinese announced it would send a trade delegation to meet with their US counterparts. Although a weaker yuan helps the export market, the central bank has recently increased efforts to stabilize the currency to avoid capital outflows by investors.
TURKISH CREDIT MOVES FURTHER INTO JUNK STATUS
With Moody’s and S&P Global Ratings cutting the country’s rating to B+ and Ba3, respectively, citing the wide current-account deficit, runaway inflation and weakening lira. The lira had found support after the Qatari government pledged investment of $15 billion, however sentiment declined after the US sanctioned members of the Turkish government until a detained US pastor is freed.
OIL PRICES FALL FOR THIRD CONSECUTIVE WEEK
With the US benchmark losing 2.5 percent from the previous Friday close, on the back of a surprise rise in US inventories and a stronger dollar hurting demand from emerging countries. The EIA reported a 6.8 million-barrel increase in US crude inventories, despite a forecast of a 2.4 million-barrel fall. WTI and Brent crude closed the week at $65.91 and $71.83 a barrel, respectively.