The stock market lost ground on Monday, although the declines in some major benchmarks were more extreme than others. A budding financial crisis in Turkey once again captured the attention of investors, as the threat of rising tariffs and escalating diplomatic tension could drive a wedge through the North Atlantic Treaty Organization at a critical time for the geopolitical environment in the region. The repercussions of recent events involving Turkey echoed around the world, and some companies felt the tremors more sharply than others. First Majestic Silver (NYSE:AG), Turkcell Iletisim Hizmetleri (NYSE:TKC), and Transocean (NYSE:RIG) were among the worst performers on the day. Here's why they did so poorly.
First Majestic loses its luster
Shares of First Majestic Silver plummeted 15% on a terrible day for silver mining stocks in general. The miner's second-quarter results included record production of 5.1 million ounces, up 32% from levels three months ago. But all-in sustaining costs of $16.43 per ounce were only slightly higher than the $16.74 per ounce that First Majestic realized on average. With silver prices declining almost $0.30 per ounce to break below the $15-per-ounce mark today, many investors fear that First Majestic will no longer be able to sustain profitability.
Turkcell takes a tumble
Turkcell stock dropped 9% as a direct result of its proximity to the financial crisis brewing in Turkey. Higher tariffs in themselves won't necessarily hurt Turkcell as much as some other players in the Turkish economy, but the telecom company does have exposure to foreign-currency-denominated debt that it will have to repay. The devalued Turkish currency will make that task harder, and investors appear nervous about whether Turkcell will either have to default on its loan obligations or try to push through price increases to its domestic customer base -- neither of which will be a popular decision at a critical time for the nation.
Transocean fears a production slowdown
Finally, shares of Transocean lost 8%. The offshore rig equipment company has generally seen its stock do well so far this year, reflecting the rise in oil prices and greater levels of production activity. Yet oil prices have fallen back down below the $70-per-barrel mark, and investors are worried that ongoing volatility for crude could force Transocean to make still more strategic decisions about how to handle its aging rig fleet. With revenue rising and a healthy backlog on its books, Transocean's immediate future looks bright. But a glut of equipment industrywide still presents a challenge that the company will need to resolve in order to maximize its profit going forward.