Wall Street closed solidly lower on Friday, joining a global equity market selloff, as the mounting currency crisis in Turkey raised the alarm for possible problems for other markets especially in Europe.
News that the European Central Bank is worried about the exposure major EU banks (especially in Germany, Italy and Spain) have to Turkish banks and businesses helped add to the sell-off.
Eurozone shares fell 1.7% on Friday and the US S&P 500 fell 0.7% on Friday in response to worries about the problems from Turkey with the lira falling like a stone and President Donald Trump imposing a new round of tariffs on certain metal products.
As a result of Friday’s slide, Eurozone shares lost 1.3% for the week, US shares were down 0.3% and Japanese shares fell 1%.
But Chinese shares bounced 2.7% higher over the week on solid trade and inflation data.
Safe haven buying saw bond yields fall (except in Italy) towards the end of the week.
US bond yields fell on Friday as investors sought those safe havens – the yield fell to 2.86% for the 10 year bond, despite a rise in US core inflation and the belief that rising US inflation will keep the Fed focussed on raising rates.
On Wall Street Friday’s losses turned what would have been weekly gains into losses.
The S&P 500 fell 20.30 points, or 0.7%, to 2,833.28 and posted a 0.3% weekly loss.
The Dow dropped 196.16 points, or 0.8%, to 25,313.07 for a 0.6% weekly loss and the Nasdaq shed 52.67 points, or 0.7% to 7,839.11, but managed to end the week with a 0.4% gain.
The dollar index, a gauge of the greenback against a basket of weighted peers, was up 1.2% over the past five-trading days, its third straight weekly gain.