Asian stocks dropped to a one-year low on Wednesday as Chinese markets were hurt by Turkey’s financial crisis. MSCI’s index of Asia-Pacific shares outside Japan dropped over 1% to its lowest since a year ago, after bouncing 0.4% the day before when the Turkish lira showed signs of stabilizing.
Hong Kong’s Hang Sang dipped 1.5%, nearly reaching a one year and the Shanghai Composite Index dropped 1.3% according to Reuters.
Japan’s Nikkei decreased 1% after rallying more than 2% on Tuesday. The lira TRYTOM=D3 dropped to a record low 7.24 to the dollar during the beginning of this week but became 2% weaker at 6.47 after rebounding over 8% overnight. Even though the lira stayed just above record lows, tensions remain the same between Washington and Ankara.
Turkey has raised tariffs on U.S. products in response to the deliberate attacks on Turkey’s economy. The U.S. currency’s strength was compounded by Euro’s fall, which has been determined by potential risks to European banks from Turkey’s financial crisis.
The Euro dropped to EUR 1.1319, Its weakest since July 2017. In addition to overnight gains, the dollar last traded up 0.1% at JPY 111.25. China’s onshore yuan faded to a 15-month low above 6.9 per Dollar after their central bank had the lowest mid-point since May 2017. A stronger Dollar caused pressure on crude oil prices and increased the cost burden on non-U.S. buyers of commodities.
Brent crude futures LCoc1 fell 0.2% to USD 72.31 a barrel and U.S. crude CLc1 dipped 0.45% to USD 66.73 a barrel.