Yahoo Finance Early Price Action in Stocks, Treasurys, Dollar Indicates Risk is Off
Asian equity markets finished lower on Wednesday as worries over Turkey’s currency crisis continued despite efforts by the country to stabilize the Lira.
At 0300 GMT, Japan’s NIKKEI is trading 22270.90, down 85.18 or -0.38%. Hong Kong’s HSI is trading 27417.85, down 335.08 or -1.21% and the KOSPI is at 2258.91, up 10.46 or +0.47%.
In Australia, the S&P/ASX 200 is up 6309.70, up 10.10 or +0.16%. In China, the Shanghai Index is at 2756.74, down 24.23 or -0.87%.
Investors are playing a cat-and-mouse game with the Turkish Lira because no one is certain how the situation will play out over the short-term. On Tuesday, the Lira strengthened from a record low touched earlier this week, causing investor sentiment to firm overnight.
Early Wednesday, the Turkish Lira stabilized after rebounding more than 8 percent the previous session.
Even the Turkish government appears to be in disarray with President Tayyip Erdogan calling for lower interest rates, which tend to weaken a currency, while fraying ties between the United States and China by calling for a boycott of electronic products from the United States.
At the same time Erdogan was pressuring the Lira, Turkish Finance Minister Berat Albayrak, was stating at a news conference the Lira will strengthen.
U.S. Equity Markets
The major U.S. equity indexes are edging lower early Wednesday, failing to follow-through to the upside, following Tuesday’s strong performance. The price action suggests that Turkey is still a major concern for investors. Yesterday, stocks rebounded after a firmer Lira lifted investor sentiment. This two-sided price action is likely to continue all week as concerns over risk are likely to offset economic data and earnings reports.
At 0300 GMT, the benchmark S&P 500 Index is trading 2835.25, down 5.75 or -0.20%. The blue chip Dow Jones Industrial Average is at 25238, down 56 or -0.22% and the tech-driven NASDAQ Composite is trading 7444.25, down 13.50 or -0.18%.
U.S. Treasury Markets
Wednesday’s early price action in the 10-year U.S. Treasury note and 30-year U.S. Treasury bond futures markets indicates that today is shaping up to be a risk-off trading session. Both futures contracts are posting gains which means rates are falling.
Yesterday, government debt yields moved higher as the Turkish Lira stabilized following days of geopolitical uncertainty within the country.
U.S. Economic Data
Although the market focus has been mainly fixated by the economic crisis in Turkey, there were some fresh U.S. reports on Tuesday.
U.S. import prices were surprisingly flat in July as a rally in the cost of fuels was offset by weak prices elsewhere, hinting that a strong greenback is tempering import inflation pressures.
The Labor Department said on Tuesday the unchanged reading in import prices last month followed an upwardly revised 0.1 percent drop in June. Traders and economists had forecast import prices gaining 0.1 percent in July. In the year through the end of July, import prices rose 4.8 percent, their largest gain since February 2012.
This article was originally posted on FX Empire
