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Small-Caps Push Stocks Higher as Turkey Fears Wane: Markets Wrap

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Small-Caps Push Stocks Higher as Turkey Fears Wane: Markets Wrap

  • Lira gains with Turkish equities, emerging-market shares fall
  • Euro hits lowest against the U.S. dollar since July 2017
Too Early to See Market Contagion From Turkey, Says Spath

U.S. stocks halted their longest slide since March and the dollar reached a 14-month high as investors brushed off Monday’s Turkey-induced turmoil. Treasuries dropped and WTI crude hovered above $67 a barrel.

The S&P 500 Index rose for the first time in five days amid thin summer trading. Small-cap shares paced the gains, with the Russell 2000 Index leading among major U.S. equity benchmarks. Tapestry Inc., the handbag maker formerly known as Coach, was the top performer in the S&P 500 after its quarterly results showed that shoppers are returning to its Kate Spade brand. Meanwhile, Tesla Inc. sank 2.5 percent following reports that Goldman Sachs Group Inc. hadn’t been formally hired as an adviser to help take the company private.

The gains in American stocks tracked a similar move in Asia as the rout in Turkish assets eased. The lira rose, and the country’s benchmark equity index climbed even as a diplomatic standoff with the U.S. dragged on. European peripheral debt climbed, but the euro fell to its lowest against the dollar since June 2017 and the Stoxx Europe 600 Index plunged after data showed the region’s economy grew faster in the second quarter than initially reported.

“Since there doesn’t appear to be signs of contagion at this point -- although Spanish, French and Italian banks are owed close to $140 billion by Turkish borrowers -- it doesn’t seem like there is much to worry about,” Chris Zaccarelli, chief investment officer for the Independent Advisor Alliance, wrote in a note Tuesday. “But these things can turn on a dime.”

Terri Spath, chief investment officer at Sierra Investment, says it’s too early to say there’s contagion from Turkey.

(Source: Bloomberg)

In Asia, Japan’s equities outperformed while the yen had its biggest decline in two weeks. Shares in Shanghai and Hong Kong dropped after data showed China’s economy hit a mid-year rough patch, though the offshore yuan edged higher.

Elsewhere, oil fell as focus returned to near-term supply risks. Bitcoin briefly slid below $6,000 and dozens of smaller digital tokens declined as this month’s sell-off in cryptocurrencies showed few signs of letting up.

Terminal users can read more in our Bloomberg Markets Live blog here.

Here are some key events coming up this week:

  • Earnings are due this week from companies including Maersk, China Unicom, Tencent, Cisco, Walmart, and Carlsberg.
  • Brexit talks between the EU and the U.K. resume in Brussels Thursday.
  • Retail sales data in the U.S. is on Wednesday, followed by housing data on Thursday.

These are the main moves in markets:

Stocks

  • The S&P 500 rose 0.6 percent to 2,839.96, while the Russell 2000 climbed more than 1 percent.
  • The Stoxx Europe 600 Index fell 0.5 percent, its fifth straight decline.
  • The MSCI All-Country World Index increased 0.3 percent.
  • The MSCI Asia Pacific Index added 0.2 percent.
  • The MSCI Emerging Markets Index retreated 0.1 percent, marking it’s fifth consecutive down day.

Currencies

  • The Bloomberg Dollar Spot Index rose less than 0.1 percent to the highest since June 2017.
  • The euro declined 0.6 percent to $1.1346, the weakest in 14 months.
  • The British pound dropped 0.5 percent to $1.2714.
  • The Japanese yen sank 0.5 percent to 111.20 per dollar.
    The MSCI Emerging Markets Currency Index gained 0.2 percent following four days of declines.

Bonds

  • The yield on 10-year Treasuries advanced one basis points to 2.8913 percent.
  • Germany’s 10-year yield added two basis points to 0.327 percent, the first advance in a week.
  • Britain’s 10-year yield rose one basis point to 1.263 percent.

Commodities

  • The Bloomberg Commodity Index climbed 0.3 percent, it’s first increase in four sessions.
  • West Texas Intermediate crude gained 0.1 percent to $67.24 a barrel.
  • Gold advanced 0.1 percent to $1,194.38 an ounce.

— With assistance by Rita Nazareth, Andreea Papuc, and Samuel Potter