Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
European indices have today been the target of investors’ fears about emerging markets. The situation in Turkey is beginning to show signs of fragility. Yesterday, economic confidence hit the lows since March 2009 (in the midst of the global financial crisis), which led to a further decline in the Turkish Lira against the US Dollar. In the last 3 days, the Turkish currency depreciated by 6% against the US Dollar. Meanwhile in Argentina, Peso lost 8.15% even after President Macri announced that he was negotiating with the IMF on a loan of 50,000 M.USD, which should offset the country’s current inability to fund intentional markets. Since the beginning of the year, Argentino lost 45% of its value against the US Dollar. These two events, although uncorrelated, focused mainly on the securities most exposed to these two economies. In this sense, as Spanish banks BBVA and Santander, as well as Telefónica were particularly targeted by investor sales.
The vicissitudes of European and emerging markets were having a limited impact on Wall Street. At the economic level, data on household income and expenditure as well as inflation associated with it were in line with economists’ forecasts. Household expenditures increased 0.40% in July compared to the previous month (in line with forecasts) while income rose 0.30% (marginally below the estimated 0.40%). But the most relevant figure was inflation associated with household expenditure, the Fed’s preferred price level indicator. In its core version (which excludes goods with more volatile prices) stood at 2% in annual terms.