Global Stocks Surrender to Turkish Pressures

Global stocks indexes hit fresh lows on Monday as traders dumped equities and shed emerging market shares in favor of safer assets including the government bonds and the U.S. dollar. Asian and European shares took a beating, showing red across the board after the Turkish lira hit record lows.

Japan’s Nikkei 225 closed down nearly 2 percent while Hong Kong’s Hang Seng Index and South Korea’s Kospi both ended the day down about 1.50 percent. The Shanghai Composite closed 0.32 percent lower. In Asia, the FTSE was down 0.58 percent as of 12:57 p.m. GMT, the DAX was down 0.65 percent and France’s CAC was down 0.20 percent.

The currency markets also struggled, with emerging markets taking the brunt of the losses. The South African rand fell as much as 3.1 percent, the Mexican peso was down as much as 2.5 percent and the Russian ruble slumped 0.8 percent. The euro fell to a one-year low against the dollar on Monday, plagued by concerns that the European Central Bank is overexposed to Turkey.

The euro hit new 13-month lows against the dollar, trading at $1.1395, in the early afternoon in London. The common currency was also lower against the Swiss franc. It fell to new 10-week lows against the yen and was down 0.35 percent to 125.93 on Monday afternoon. The Swiss franc, long thought to be a safe haven asset, was trading near one-year highs. The yen is also expected to head higher as turbulence surrounding the lira continues.

CNBC reports Ulrich Leuchtmann, an FX strategist at Commerzbank in Frankfurt, predicting that we’re “heading for a full-blown emerging market crisis.” His assessment was based on the 1997 Asian financial crisis that caused a deep selloff worldwide.