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11-Aug2018

US markets end lower as financial crisis in Turkey spooks global markets

The US markets ended lower on Friday with the losses of over half a percent, amid concerns about rising tensions between the U.S. and Turkey on account of the Turkish detention of U.S. pastor Andrew Brunson. The Turkish lira has shown a sharp decline to a record low, contributing to considerable weakness in the overseas markets. Turkish President Recep Erdogan has urged Turks to sell dollars and gold and buy the lira. President Donald Trump subsequently announced that he has authorized the doubling on steel and aluminum tariffs on Turkey. Trump stated 'I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar'. Further, he added 'Aluminum will now be 20% and Steel 50%. Our relations with Turkey are not good at this time'. Besides, the U.S. dollar surged13% against the Turkish lira. The lira is down 20% this week, bringing itsyear-to-date slump to more than 40%.

On the economic front, the Labor Department released a report showing a modest increase in consumer prices in the month of July. The Labor Department said its consumer price index rose by 0.2 percent in July after inching up by 0.1 percent in June. The increase in prices matched street estimates. The index for shelter rose by 0.3 percent in July and accounted for nearly 60 percent of the increase by the consumer price index. Excluding food and energy prices, the core consumer price index also edged up by 0.2 percent in July, matching the increases seen in the two previous months as well as expectations. Along with the shelter index, the indexes for used cars and trucks, airline fares, new vehicles, household furnishings and operations, and recreation all increased.

Dow Jones Industrial Average dropped 196.09 points or 0.77 percent to 25313.14, the S&P 500 declined 20.30 points or 0.71 percent to 2833.28 and Nasdaq was down by 52.67 points or 0.67 percent to 7839.11.


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