published Jul 17th 2016, 5:05 pm, by Oliver Renick

(Bloomberg) —
U.S. stock-index futures rose at the open, erasing losses triggered by the failed military coup in Turkey, a sign American markets will be spared financial fallout from unrest in the Mediterranean nation.

Futures contracts on the S&P 500 Index rose 0.1 percent at 6:01 p.m. in New York, the first trading since factions of the Turkish army tried to overthrow the government of President Recep Tayyip Erdogan. The revolt collapsed just hours after it started, though more than 200 people died in the attacks.

The political turmoil upended calm on global financial markets, reminding investors who recently put the stress of Brexit behind them that geopolitical risks remain. Prior to the coup attempt, equities around the world capped a week of gains amid signs the U.K. government stabilized and signals from Japan and the Bank of England that more stimulus is coming.

“To shore up confidence the government would need to make an assurance that asset seizures would not be on the table, and that they would work to normalize their relationship with the U.S.,” Emad Mostaque, a London-based strategist at emerging-markets consultancy Ecstrat Ltd., said via email.

Futures fell 0.4 percent late Friday after reports that the army had seized power amid fighting in c. The news stoked demand for haven assets, with Treasuries paring losses and the yen strengthening. Erdogan’s supporters put down the coup by Saturday. Most Gulf stock indexes rose on Sunday as the first equity investors able to trade after the coup failed largely shrugged it off.

In the U.S., the S&P 500 capped for a third week of gains, setting four records along the way before stumbling Friday. Data showing strength in the American consumer and at factories, the first major readings data since a blowout jobs report on July 8, added to signs that the the world’s largest economy is gaining traction. At the same time, the market is pricing in a less than 50 percent chance the Federal Reserve will boost rates before the end of 2016.

Investors in Turkey are bracing for a tumultuous trading session. The nation’s currency plunged the most in eight years against the dollar Friday, while an exchange-traded fund tied to the country’s shares fell 2.5 percent. The lira pared almost half of those losses when trading resumed Sunday in New York. Equity markets are set to reopen Monday. On Sunday, the nation’s central bank said it would provide unlimited liquidity to banks and take necessary action to ensure financial stability.

To contact the reporter on this story: Oliver Renick in New York at orenick2@bloomberg.net To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net

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