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Concerns About Turkey May Weigh On Wall Street

The major U.S. index futures are pointing to a lower opening on Friday, with stocks likely to come under pressure are showing a lack of direction over the two previous sessions.

The downward momentum on Wall Street comes amid concerns about rising tensions over the U.S. and Turkey due to the Turkish detention of U.S. pastor Andrew Brunson.

The Turkish lira has shown a sharp decline to a record low, contributing to considerable weakness in the overseas markets.

In response, Turkish President Recep Erdogan has urged Turks to sell dollars and gold and buy the lira.

"There are various campaigns being carried out. Don't heed them," Erdogan said. "Don't forget, if they have their dollars, we have our people, our God."

Following the mixed performance seen on Wednesday, stocks continued to show a lack of direction during trading on Thursday. The major averages once again spent the day bouncing back and forth across the unchanged line.

The major averages ended the day mixed. While the Nasdaq inched up 3.46 points or less than a tenth of a percent to 7,891.78, the Dow fell 74.52 points or 0.3 percent to 25,509.23 and the S&P 500 edged down 4.12 points or 0.1 percent to 2,853.58.

The choppy trading on Wall Street came as traders remained reluctant to make significant moves as they weigh lingering trade war concerns against largely upbeat corporate earnings news.

On the U.S. economic front, the Labor Department released a report showing first-time claims for unemployment benefits unexpectedly edged lower in the week ended August 4th.

The report said initial jobless claims dipped to 213,000, a decrease of 6,000 from the previous week's revised level of 219,000.

Economists had expected jobless claims to inch up to 220,000 from the 218,000 originally reported for the previous week.

A separate report released by the Labor Department showed producer prices unexpectedly came in unchanged in the month of July.

The Labor Department said its producer price index was unchanged in July after rising by 0.3 percent in June. Economists had expected producer prices to increase by 0.2 percent.

Excluding food and energy prices, the core producer price index inched up by 0.1 percent in July after climbing by 0.3 percent in the previous month. Core prices had been expected to rise by 0.2 percent.

Meanwhile, the Commerce Department released a report showing a modest uptick in wholesale inventories in the month of June.

Most of the major sectors showed only modest moves on the day, contributing to the lackluster close by the broader markets.

Telecom stocks saw substantial strength, however, with the NYSE Arca North American Telecom Index jumping by 2.9 percent.

Tobacco and chemical stocks have also moved considerably higher, while weakness is visible among oil service and steel stocks.

Commodity, Currency Markets

Crude oil futures are climbing $0.43 to $67.24 a barrel after dipping $0.13 to $66.81 a barrel on Thursday. Meanwhile, after slipping $1.10 to $1,219.90 an ounce in the previous session, gold futures are inching up $0.30 to $1,220.20 an ounce.

On the currency front, the U.S. dollar is trading at 111.09 yen compared to the 111.08 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1453 compared to yesterday's $1.1527.

Asia

Asian stocks ended broadly lower on Friday as investors fretted about rising trade tensions between the U.S. and China as well as a new set of U.S. sanctions on Russia. A diplomatic rift between the U.S. and Turkey also kept underlying sentiment cautious.

Chinese shares posted their best weekly gains in a month, with technology companies leading the surge after China revamped a national leadership group charged with planning and studying its key technological development strategies.

The benchmark Shanghai Composite Index ended roughly flat at 2,795.31 but ended the week up by 2 percent. Hong Kong's Hang Seng Index, however, dropped 240.68 points or 0.8 percent to 28,366.62.

Japanese shares fell sharply to hit one-month low, with a firmer yen and heavy selling in the technology sector weighing on the markets. The Nikkei 225 Index tumbled by 300.31 points or 1.3 percent to 22,298.08, the lowest closing level since July 12th. The broader Topix Index closed 1.2 percent lower at 1,720.16.

The yen rose against the dollar as trade worries persisted and data showed the country's economy grew more than expected in the second quarter, driven by higher consumer spending and business investment.

Japanese GDP expanded a seasonally adjusted 0.5 percent sequentially in the second quarter, the Cabinet Office said in a preliminary reading. That exceeded expectations for an increase of 0.3 percent following the 0.2 percent loss in the three months prior.

Tokyo Electron lost 3.6 percent, Advantest Corp slumped 4.9 percent and Sumco Corp retreated 4.7 percent after Morgan Stanley downgraded its view on the U.S. chip sector. Fujifilm Holdings rallied 3.5 percent after announcing a share buyback.

Australian shares fell modestly as energy stocks retreated and building materials supplier James Hardie Industries forecast adjusted net operating profit for fiscal 2019 that fell slightly below expectations.

The benchmark S&P/ASX 200 Index dropped 19.30 points or 0.3 percent to 6,278.40, while the broader All Ordinaries Index ended down 16.80 points or 0.3 percent at 6,366.80.

Energy stocks Santos, Oil Search, Origin Energy and Beach Energy fell 2-4 percent. Australia's biggest power producer AGL Energy declined 2.3 percent to extend Thursday's losses.

Mining heavyweight Rio Tinto gave up 0.8 percent on going ex-dividend, while rival BHP Billiton eased 0.7 percent. Banks ANZ, NAB and Westpac rose between 0.3 percent and half a percent.

Europe

European stocks have fallen sharply on Friday as a banking crisis in Turkey coupled with lingering worries over a trade war between the world's two biggest economies has hurt demand for riskier assets.

The Turkish lira has plunged to hit a new low amid a deepening rift with the United States and intensifying worries about the state of the economy.

While the U.K.'s FTSE 100 Index has fallen by 0.7 percent, the French CAC 40 Index is down by 1.4 percent and the German DAX Index is down by 1.8 percent.

Spanish lender BBVA and Italy's UniCredit are posting steep losses on worries about the contagion effects of a dramatic fall in the Turkish lira.

Biotechnology firm Novozymes has also shown a notable decline after its second quarter results came in below expectations.

Budget carrier Ryanair Holdings has moved to the downside after grounding 400 flights amid a coordinated 24-hour workers strike.

In economic news, U.K. economic growth doubled in the second quarter driven by stronger growth in both services and construction sectors, first quarterly estimate from the Office for National Statistics showed.

Gross domestic product rose 0.4 percent, matching expectations and faster than the 0.2 percent expansion seen in the first quarter.

U.K. industrial production also expanded in June after falling for three straight months. Output climbed 0.4 percent month-on-month, reversing a 0.2 percent fall in May. This marked the first increase in four months.

France's industrial and manufacturing output rebounded in June, driven by a recovery in petroleum output.

U.S. Economic Reports

Consumer prices in the U.S. showed a modest increase in the month of July, according to a report released by the Labor Department.

The Labor Department said its consumer price index rose by 0.2 percent in July after inching up by 0.1 percent in June. The increase in prices matched economist estimates.

Excluding food and energy prices, the core consumer price index also edged up by 0.2 percent in July, matching the increases seen in the two previous months as well as expectations.

by RTTNews Staff Writer

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