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 (LON:AAL), Chilean copper miner Antofagasta (LON:ANTO) 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.
"Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient.
Any references to historical price movements or levels is informational based on our analysis and we do not represent or warrant that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, the author does not guarantee its accuracy or completeness, nor does the author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
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