Wall Street couldn’t avoid the bloodbath on Friday triggered by a collapse of the Turkish lira amid escalating diplomatic tensions between the US and Turkey. Investors are worried about political uncertainty in the world.
The Dow Jones Industrial Average index slid 245 points, or almost two percent, during early trading hours on Wall Street. Two other key US indices, the S&P 500 and the Nasdaq, pulled back 0.7 percent.
Shares in leading US banks also plunged significantly with Bank of America, Goldman Sachs, Morgan Stanley, and J.P. Morgan Chase all falling over one percent.
Markets in Europe were also turbulent with Germany’s DAX falling two percent, French CAC 40 falling almost two percent, and Britain’s FTSE 100 declining 0.8 percent.
Emerging markets also collapsed on Friday. Russia’s dollar-traded RTS index plunged over three percent, Brazil Bovespa index was losing 2.3 percent, and the Turkish Borsa Istanbul index saw a 5.4 percent sell-off.
The broad market sell-off began with the collapse of the Turkish lira after a delegation from Turkey returned from Washington without apparent progress on the detention of American pastor Andrew Brunson, accused by Ankara of aiding the failed military coup in Turkey in 2016.
Brunson, a US citizen and Turkish resident for over two decades, was arrested in Turkey on charges of terrorism and espionage. He is facing up to 35 years in prison if found guilty.