U.S. Stock Futures Show No Signs of Panic Over Turmoil in Turkey

  • S&P 500 contracts eralse losses triggered by coup attempt
  • Equities capped third week of gains, sit near all-time highs

U.S. stock-index futures rose, erasing losses triggered by the failed military coup in Turkey, a sign American markets will be spared financial fallout from unrest in the Mediterranean nation.

September contracts on the S&P 500 Index added 0.3 percent at 6:30 p.m. in New York, the first trading since factions of the Turkish army tried to overthrow the government of President Recep Tayyip Erdogan. The revolt collapsed just hours after it started, though more than 200 people died in the attacks.

The rebound is another instance of resilience for U.S. equities, which last week powered to four consecutive records after making up all of the plunge following Britain’s secession vote and have rallied for three consecutive weeks. While a reminder that geopolitical stress lingers over a bull market that is more than seven years old, Turkey’s uprising looked unlikely to stem the upward trend in U.S. stocks.

“It’s not going to have much of a market impact,’’ said Nick Sargen, who helps manage $46.2 billion as chief economist and senior investment adviser for Fort Washington Investment Advisors Inc. “Because it was a failed coup, it gets swept under the rug. The volatility in the markets this year is from outside the U.S. So far we’ve absorbed it because our economy is relatively resilient. This week, the focus is going to be on second quarter earnings.”

Futures fell 0.4 percent late Friday after reports that the army had seized power amid fighting in Istanbul and Ankara. The news stoked demand for haven assets, with Treasuries paring losses and the yen strengthening. Erdogan’s supporters put down the coup by Saturday. Most Gulf stock indexes rose on Sunday as the first equity investors able to trade after the coup failed largely shrugged it off.

The S&P 500 advanced 1.5 percent last week amid data showing strength in the American consumer and at factories, the first major readings data since a blowout jobs report on July 8, added to signs that the the world’s largest economy is gaining traction. At the same time, the market is pricing in a less than 50 percent chance the Federal Reserve will boost rates before the end of 2016.

Investors in Turkey are bracing for a tumultuous trading session. The nation’s currency plunged the most in eight years against the dollar Friday, while an exchange-traded fund tied to the country’s shares fell 2.5 percent. The lira pared almost half of those losses when trading resumed Sunday in New York. Equity markets are set to reopen Monday. On Sunday, the nation’s central bank said it would provide unlimited liquidity to banks and take necessary action to ensure financial stability. 

“To shore up confidence the government would need to make an assurance that asset seizures would not be on the table, and that they would work to normalize their relationship with the U.S.,” Emad Mostaque, a London-based strategist at emerging-markets consultancy Ecstrat Ltd., said via e-mail.

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