The FTSE opened lower this morning catching the contagion from a free-fall in the Turkish lira and the Russian rouble which are affecting the euro, banking stocks and large Russian London-listed companies.
The Turkish lira went into a free-fall overnight, declining by more than 10% to trade at around 6 against the dollar, as the country teeters on the edge of a balance of payment crisis and faces political pressure from Washington over the detention of a US pastor. The move was further exaggerated by reports that the European Central Bank is increasingly worried about the exposure of European banks to Turkey.
The turmoil in the currency market didn’t stop there. Asian markets declined, most prominently the Nikkei which fell 1.3% and European bourses all opened lower as investors started ditching higher risk assets to look for safe haven buys such as US bonds. The euro hit the lowest level against the dollar in over a year.
In London, shares in Russian steel maker Evraz plunged 7.42% as the latest set of US sanctions against Russia are beginning to bite. The US said Thursday it would penalise Russia for its involvement in the attempt on the life of its former spy Sergei Skripal with a new set of trade restrictions causing the rouble to tumble and Russian companies to be sold off on Western markets. Other miners were also under pressure as gold and copper prices dropped overnight. Anglo-South African gold producer Anglo American, Chilean copper miner Antofagasta and gold producer Rangold are all trading between 2.35% and 2.68% lower.
House of Fraser in administration
A number of retail chains have gone into administration this year including the likes of Carpetright and Mothercare, with Homebase struggling to avoid this fate. On Friday upmarket retailer House of Fraser joined the sorry line-up saying that it has appointed administrators after giving up the fight to save the business. HoF’s reasons for closure are the same as for the less glamourous labels – competition from internet sales, too many stores and not enough physical visitors. The company’s future now lies in the hands of administrators Ernst & Young who are trying to find a buyer to save the struggling chain.
CFD and forex trading are leveraged products and can result in losses that exceed your deposits. They may not be suitable for everyone. Ensure you fully understand the risks. From time to time, City Index Limited’s (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material. As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed