Stocks recover as Turkish lira steadies, fears ease

Markets halted their longest slide in weeks Tuesday as investors brushed off Monday’s Turkeyinduced turmoil.

The Turkish lira steadied as officials from Turkey and the U.S. said the countries are in talks to ease diplomatic tensions, which have resulted in high tariffs on Turkish steel and aluminum. Stocks in emerging markets such as Argentina, Russia and Brazil jumped.

Canada’s main stock index closed higher on broad gains as investor concerns looked to ease.

“The sharp reaction over the last few days probably got ahead of itself, and the lack of more bad news was enough to ease some of the fears,” said Craig Jerusalim, portfolio manager at CIBC Asset Management.

The S&P/TSX composite lost 166.23 points on Friday’s and Monday’s declines, but regained some of that Tuesday with a 79.92-point climb to close at 16,330.67. The index had an intra- day high of 16,341.97 and 187.16 million shares traded hands.

In the U.S., the biggest gains went to small and mid-size companies, which do more business domestically compared to the large multinational firms on indexes like the S&P 500 and the Dow Jones Industrial Average. Retailers rose in part due to strong quarterly reports.

The S&P 500 index climbed 18.03 points, or 0.6 per cent, to 2,839.96. The Dow Jones Industrial Average gained 112.22 points, or 0.4 per cent, to 25,299.92. The Nasdaq composite added 51.19 points, or 0.7 per cent, to 7,870.89. The Russell 2000 index advanced 17.26 points, or one per cent, to 1,692.58.

The S&P 500 fell a combined 1.1 per cent Friday and Monday as investors worried that Turkey ’s woes would affect other countries.

The reduced tensions with Turkey also stopped a rally in bond prices and sent yields and interest rates higher. That helped banks. Industrial and basic materials companies also rose Tuesday, but compared to other parts of the market, they didn’t recover as much of their losses.

Invesco Chief Global Market Strategist Kristina Hooper said investors are shifting money into more U.S.-focused companies in response to the Trump administration’s aggressive handling of its dispute with Turkey.

Economists say Turkey ’s central bank still needs to raise interest rates significantly to strengthen its currency. President Recep Tayyip Erdogan has ruled out that step. The Canadian Press and The Associated Press