Sunday 4 December 2016

Stocks plummet on Deutsche concerns

Published 27/09/2016 | 02:30

Traders work at their desks in front of the German share price index, DAX board, at the stock exchange in Frankfurt
Traders work at their desks in front of the German share price index, DAX board, at the stock exchange in Frankfurt

Stocks almost erased their monthly advance yesterday as Deutsche Bank sank on speculation it will need to raise capital. Bonds climbed as traders awaited last night's US presidential debate.

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Financial companies dragged down global equities after reports that the German government wouldn't step in to back the nation's largest lender, fuelling investor concern about its finances.

All the anxiety over capital buffers put European banks in the spotlight at a time when the region's economy has been sending mixed signals.

While a spokesman for German Chancellor Angela Merkel told reporters there are "no grounds" for speculation over state funding for Deutsche Bank, the International Monetary Fund said in June that the lender may be the biggest contributor to systemic risk among the world's largest financial companies.

"The negative implications of what's happening at Deutsche Bank are weighing on sentiment," said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.

In Ireland, the ISEQ Overall Index slumped 1.44pc to 6,021.

Unsurprisingly, Bank of Ireland got caught up in that negative banking sentiment. Its shares tumbled 5.3pc to 17.6 cent. CRH was down 2.4pc at €29.34, while hotel group Dalata was 2.6pc lower at €4.00.

The UK's FTSE-100 fell 1.3pc. Germany's DAX was 2.2pc lower and France's CAC-40 was down 1.8pc.

The FTSE's fall made for its worst one-day performance in three months, with Lloyds pushing banks lower after a downgrade by Goldman Sachs and miners tracking weaker metals prices. Lloyds fell 3.1pc.

Bloomberg/Reuters

Irish Independent

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