Turkey woes see Wall Street end week on sour note

Turkey woes see Wall Street end week on sour note

NYSE 286
Trades work on the floor of the New York Stock Exchange. (Photo: AP/Richard Drew)

NEW YORK: Wall Street fell markedly on Friday (Aug 10) amid investors' fears of economic contagion from Turkey, which is locked in a diplomatic struggle with Washington while its currency plunges.

The slide followed a tweet from US President Donald Trump announcing he was doubling US tariffs on Turkish steel and aluminium.

The benchmark Dow Jones Industrial Average and broader S&P 500 finished the week at a loss while the tech-heavy Nasdaq posted a slender gain.

But all three ended the day in the red: the Dow fell 196.09 points (0.77 per cent) to 25,313.14 while the S&P and Nasdaq shed 20.30 points (0.71 per cent) and 52.67 points (0.67 per cent) respectively to finish at 2,833.28 and 7,839.11.

Trump's announcement came as Turkey's embattled lira hit new record lows against the US dollar and euro, losing more than 16 per cent as strains with the United States intensified and fears grew over the exposure of European banks.

Meanwhile, markets are deeply concerned over the direction of economic policy with inflation at nearly 16 per cent but the central bank reluctant to raise rates in response.

Turkey remains at loggerheads with the United States in one of the worst spats between the two NATO allies in years over the detention for the last two years of American pastor Andrew Brunson and a host of other issues.

Washington this month also imposed sanctions on senior Turkish officials, angering President Recep Tayyip Erdogan and prompting retaliatory measures by Ankara.

Alan Skrainka of Cornerstone Wealth Management said the Turkey-related turbulence should soon subside.

"I don't think that the Turkish situation is really important to the global economy," he told AFP.

"It's a very small portion of the global economy and these problems are a reflection of the internal political situation in the country."

But Trump's latest Twitter outburst was another sign the White House is not tailoring trade policy to suit Wall Street's immediate needs.

Shares in trade-sensitive companies fell. Boeing lost 1.3 per cent and Caterpillar shed 1.9 per cent.

Meanwhile, tech giant Intel lost 2.6 per cent after its shares were downgraded to "sell" due to what Goldman Sachs called "manufacturing issues."

Economic data showing US consumer inflation rose steadily in July, supporting the case for another interest rate hike next month by the Federal Reserve.

Source: AFP/ec