Turkish lira and equities drop as Russian jet downed near Syria border

Geopolitical risks were evident in trading on Tuesday (November 24th) as oil rose while the Turkish lira slumped and stocks fell after a Russian jet was downed near the Turkey-Syria border.

The lira fell sharply against the US dollar, declining almost one per cent, following reports from the Turkish military that its planes had destroyed a Russian jet that had violated the country’s airspace, a claim denied by Moscow.

Equities in Europe were also lower, with the benchmark Euro Stoxx 600 sliding 1.3 per cent in the morning session.

The FTSE 100 fell 0.8 per cent to 6,255.25, dragged down by airlines, with easyJet dropping four per cent.

A UK government announcement to boost defence spending lifted Babcock International Group, which rose five per cent.

Lufthansa was the chief faller in Frankfurt, declining by nearly three per cent as the DAX shed 0.8 per cent to hold just above 11,000.

Stocks in Russia were lower following the downing of the jet, with the RTS index dropping 2.6 per cent, while the ruble was lower against the dollar.

Meanwhile, oil was higher as markets responded to claims by Saudi Arabia that it would do all it can to ensure a stable market.

Brent climbed nearly one per cent to $45.26 a barrel, while US light crude for January delivery rose to almost $42 a barrel in New York.

The statement from the Saudis marked a slight shift in tone following the decision a year ago by OPEC to maintain production despite the fall in crude prices. OPEC meets in Vienna on December 4th.

In the forex market, the euro edged higher against the dollar after an upbeat report on German business sentiment.

EUR/USD pared its recent run of losses to climb 0.15 per cent to 1.0670 as the IFO business climate index reached a 17-month high. Expectations the European Central Bank is preparing to launch additional stimulus next month held gains in check.

Meanwhile, there was further evidence the Federal Reserve is ready to raise rates next month, as New York Fed president William Dudley said there is a “strong case” for pulling the trigger in December if data continues to support.