U.S. stock indexes broadly gained and Turkey’s lira recovered about 5 percent, a day after crashing to an all-time low against the dollar, feeding worries that the country’s crisis might spread to other emerging markets.
“The equities and the U.S. dollar are keying primarily off of the unfolding saga in Turkey and although the lira has posted a significant rebound today, the standoff between Turkey and the U.S. is showing no sign of progress,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.
“Consequently, worries over contagion are apt to increase in the process of reducing risk appetite and renewing downside pressures on oil pricing.”
Oil drew support from concerns over lower global crude supply from top producers.
Saudi Arabia told the Organization of the Petroleum Exporting Countries that it had reduced crude output by 200,000 barrels per day (bpd) to 10.29 million bpd in July. The market also expects export declines from Iran as Washington re-imposes sanctions on Tehran.
But OPEC expects oil supply by countries outside the cartel to increase by 2.13 million bpd next year, 30,000 bpd more than forecast last month, boosted by new U.S. shale production.