Stock Market News Today 2018/08/12
Trump takes deployment of sanctions to new level.
White House aims to achieve powerful impact while avoiding military entanglements.
The White House is unsettling markets and US allies as it makes increasing use of powerful sanctions, underscoring President Donald Trump’s willingness to act alone on foreign policy even at the expense of heightening global instability.
Russian and Turkish markets were hit hard this week as US sanctions exacerbated concerns about the fragility of emerging markets.
Washington’s dispute with Ankara over the detention of a US pastor contributed to the 28 per cent slump in the Turkish lira this month. The Russian rouble has fallen 6 per cent since the US announced sweeping sanctions on Wednesday over the near-fatal poisoning in the UK of a former Russian spy.
Iran has also come under mounting financial pressure after the US reimposed sanctions following its withdrawal from the nuclear deal with Tehran, despite objections of close allies that had also signed the pact. The Iranian currency has fallen 60 per cent this year, forcing the country’s central bank to relax foreign exchange restrictions.
The US has been increasingly using sanctions since the 1990s, particularly after George W Bush ramped up activity after the September 11 2001 attacks. But Mr Trump has taken the measures to a new level, as he seeks to take muscular executive actions that avoid the cost of military entanglements and yet have an impact.
Turkey warns US it will seek ‘new friends and allies’.
Erdogan says sanctions are missiles in economic war that puts Nato alliance at risk.
Recep Erdogan has warned the US that Turkey would seek new friends and allies as it looked for help to halt a full blown currency crisis that has been made worse by an intensifying row with its Nato ally. He also ruled out raising the interest rate, saying it would hurt the poor.
“Turkey will emerge in a very short time from this exchange rate, interest rate, inflation spiral they are trying to force it into,” the Turkish president told a rally for members of his ruling Justice and Development Party at the Black Sea city of Rize. “I am telling you the real formula: If we don’t minimise this interest rate, it is a vehicle of exploitation that will make the rich richer and the poor poorer.”
The lira tumbled more than 14 per cent on Friday, its sharpest fall since a 2001 financial crisis, dragging down other emerging markets and weighing on US and European stocks, after Washington imposed sanctions and tariffs to compel it to turn over Andrew Brunson, an Evangelical preacher arrested on espionage and terrorism charges.
Mr Erdogan has cast the sell-off in financial markets as an economic war, stoking nationalist sentiment among Turks who are suspicious that foreign powers are trying to undermine national unity.
“These are the missiles, the shots of the economic war opened against our country,” the Turkish president said.
Rees-Mogg warns May not to use Labour votes to pass Brexit deal.
Pro-Leave Tory disputes that ‘no deal’ with EU would lead to economic chaos.
Jacob Rees-Mogg, the head of a large group of pro-Brexit Conservative MPs, has warned Theresa May not to try to pass a Brexit deal with votes from opposition parties.
In an interview, the MP for north-east Somerset said it would be “very dangerous” if his party’s leadership attempted to work around those opposed to a compromise deal with the EU.
“The most divisive thing for a party is to push through a policy which is opposed by a large number of your supporters on the back of opposition votes,” said Mr Rees-Mogg. “I wouldn’t have thought it was in the interests of the leadership of the party to be so divisive.”
With the Conservative party split on whether to support Mrs May’s Chequers proposals for a softer Brexit, speculation is mounting that Downing Street will have to rely on the votes of moderate Labour MPs to pass any deal through the House of Commons this autumn.
David Lidington, the Cabinet Office minister, hosted a briefing for opposition MPs last month on the government’s latest plans.
But as head of the Brexit-supporting European Research Group, Mr Rees-Mogg can influence the votes of dozens of Tory MPs — enough to cancel out Mrs May’s slender majority.
Economic Indicators, U.S. government posts $77 billion deficit in July.
The U.S. government had a $77 billion budget deficit in July, according to Treasury Department data released on Friday.
That compared to a budget deficit of $43 billion in the same month last year, the department’s monthly budget statement showed.
The 79 percent rise was in line with analysts’ expectations. Economists polled by Reuters had forecast the Treasury posting a $77 billion deficit in July.
The government’s deficit was $124 billion when accounting for calendar adjustments. That compared to an adjusted deficit of $85 billion in the same month the prior year.
The deficit for the fiscal year, which began last October, reached $684 billion, compared to a deficit of $566 billion in the same period of fiscal 2017. On an adjusted basis, the gap of $734 billion compared with $606 billion in the previous period.
Unadjusted receipts last month totaled $225 billion, down 3 percent from July last year, while unadjusted outlays were $302 billion, a jump of 10 percent from the same month in 2017.