Asia
Turkey’s currency crisis had an immediate knock-on effect on Asia stocks on Monday and prompted a global flight to safe assets like the Japanese yen and US dollar. Asia-Pacific market sentiment has been fragile in recent weeks, so Turkey’s problems easily undermined the case for emerging market stocks and currencies – even if the crisis is ultimately contained.
Recently, Japanese equities have been content to coast in the slipstream of a resurgent dollar, without threatening quarter-century highs seen in early 2018. The Nikkei 225 lost 2% or 440 points on Monday morning, revisiting July levels below 22,000 points as the yen strengthened.
The US dollar remains close to 7 Chinese yuan, but expectations of government intervention to prop up the currency may have had a stabilising effect.
China’s CSI 300 drifted less than 0.5% lower on the day, but Hong Kong’s Hang Seng fell further in percentage terms, losing 430 points or 1.5% to just below 28,000 points.
The India rupee was another currency that came under pressure against the dollar, hitting a record low on Monday. The country’s stock market drifted lower but losses were not as pronounced as in Hong Kong and Japan. The BSE Sensex has hit record highs in recent weeks, so any weakness is only likely to put a minor dent in these gains.
Europe
Shares in European banks were under pressure today amid fears over exposure to Turkey. Indices across the eurozone tracked Asia lower.
It’s a key week for the UK economy with data released on jobs, earnings and inflation on Tuesday and Wednesday. While the unemployment rate is expected to stay steady at 4.2% in the three months to June, inflation is forecast to tick up to 2.5% on the year. The data could justify the Bank of England’s rate rise this month, and provide clues as to the Bank’s next move.
The FTSE 100 was down around 40 points at 7,628 by 11am local time.
North America
US stock markets are expected to pick up where they left off on Friday and move lower.
Later on this week, Canada’s inflation rate will be in view, as will the University of Michigan Sentiment Index for July.
Companies reporting this week include Cisco (CSCO), Home Depot (HD) and WalMart (WMT).
The following week, on 24 August, the world’s central bankers meet for their annual Jackson Hole symposium. The Federal Reserve minutes for the most recent meeting will also be released.
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