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Lira gains as Erdogan claims victory in Turkey’s election
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China cuts RRR for some banks as policy loosened in Beijing
European stocks and U.S equity futures followed Asian shares lower amid seemingly gloomy prospects for global trade. Turkey’s currency surged after Recep Tayyip Erdogan claimed victory in the weekend’s election.
The Stoxx Europe 600 Index declined as every industry sector fell. Equities in Shanghai and Hong Kong led a retreat in Asia in the wake of reports the Trump administration is preparing new curbs on Chinese investments. China’s shares and the currency fell after its announcement Sunday it would free up more than $100 billion in the banking system to help cushion a slowing economy, a move that had been widely anticipated. Treasury yields declined, in another sign of a risk-off impulse that saw emerging-market equities tumble last week.
Trade tensions between the world’s two-largest economies that rattled markets and sent money pouring out of emerging markets this month are set to remain at the forefront of investors’ attention. The move by the People’s Bank of China to trim the required reserve ratio for some banks comes into effect on July 5, one day before the first round of U.S. tariffs on Chinese goods begin. Before that, the U.S. Treasury is expected to release plans for fresh rules on Chinese investment in technology companies.
“This one could well result in an escalating trade war,” Lee Ferridge, a macro strategist at State Street Corp., told Bloomberg TV in Hong Kong. “Volatility is going to continue to rise from here.”
In the first of a series of key elections in emerging markets, Erdogan claimed a mandate to govern in Turkey. He had 53 percent of the presidential vote to 31 percent for his closest challenger, with 99 percent of ballots counted, the government news agency Anadolu said.
Terminal users can read more in Bloomberg’s Markets Live blog.
These are key key events coming up this week:
- German Chancellor Angela Merkel holds private talks with leaders of the other parties in her coalition government on refugee policy and euro-area reforms in Berlin Tuesday.
- New Zealand and Indonesia monetary policy decisions on Thursday.
- U.S. personal spending probably increased in May for a third month, economists forecast ahead of Friday’s data.
- China manufacturing and non-manufacturing PMI are due on Saturday.
Here are the main market moves.
Stocks
- The Stoxx Europe 600 Index dipped 0.5 percent as of 8:04 a.m. London time.
- The MSCI World Index of developed countries fell 0.2 percent.
- The MSCI Asia Pacific Index dipped 0.8 percent to the lowest in almost seven months.
- Japan’s Nikkei 225 Stock Average sank 0.8 percent.
- The MSCI Emerging Market Index sank 0.9 percent to the lowest in nine months.
- The U.K.’s FTSE 100 Index decreased 0.4 percent.
- Futures on the S&P 500 Index declined 0.6 percent to the lowest in more than three weeks.
Currencies
- The Bloomberg Dollar Spot Index advanced 0.1 percent.
- The euro decreased 0.1 percent to $1.1635.
- The British pound dipped 0.2 percent to $1.3235.
- The Japanese yen gained 0.4 percent to 109.50 per dollar, the strongest in more than three weeks.
Bonds
- The yield on 10-year Treasuries fell two basis points to 2.87 percent, the lowest in more than three weeks.
- Germany’s 10-year yield decreased two basis points to 0.32 percent, the lowest in almost four weeks.
- Britain’s 10-year yield dipped three basis points to 1.284 percent.
Commodities
- West Texas Intermediate crude decreased 0.2 percent to $68.41 a barrel.
- Gold fell 0.2 percent to $1,266.55 an ounce, the weakest in six months.
By Adam Haigh and Samuel Potter – June 25, 2018, 5:12 PM GMT+10
— With assistance by Andreea Papuc
Source: Bloomberg