Friday September 30th

30-09-2016

Wall Street digests key inflation indicators; spotlight on Deustche Bank

U.S. stock index futures pointed to a higher open on Friday, as Deutsche Bank concerns pressured global banking stocks and U.S. investors awaited a major inflation indicator. New York-listed shares of Deutsche Bank reached an all-time low on Thursday. On Friday, Europe-listed shares tanked over 8 percent, hitting a record low, before paring some losses. The bank, which is Germany's largest by assets, is in the spotlight after the U.S. Department of Justice suggested it pay $14 billion to settle a number of investigations and rumors swirled that the bank might need a bailout. The bank's difficulties highlighted concerns about the German and broader euro zone banking sector. On Friday, European shares of Deutsche's rival, Commerzbank, fell as much as 6.5 percent after it announced jobs cuts and plan to eliminate its dividend on Thursday. Deutsche and Commerzbank were the worst-performing major banks stocks in Europe on Friday, but shares in almost every bank listed on the STOXX 600 fell. In the U.S., August personal spending came in flat, while income rose 0.2 percent. The core PCE rose 0.2 percent. This is the U.S. Federal Reserve's preferred inflation measure and a crucial determinant in when the central bank opts to hike interest rates again. Other data due on Friday include the Chicago PMI (purchasing managers' index) survey for September and the final Michigan Sentiment for September at 10 a.m. ET. The dollar index, tracking the greenback against a range of major currencies, rose on Friday. Asia markets stumbled on Friday, the final trading day of the quarter, after concerns over Deutsche Bank undermined investor sentiment. Japan's Nikkei 225 finished down 243.87 points, or 1.46 percent, at 16,449.84, while the Topix index fell 20.47 points, or 1.52 percent, to 1,322.78. Across the Korean Strait, the Kospi was lower by 25.09 points, or 1.21 percent, at 2,043.63. In Hong Kong, the Hang Seng index fell 1.82 percent by afternoon trade. Mainland Chinese shares bucked the generally downward trend across the region to close higher; the Shanghai composite added 7 points, or 0.23 percent, to 3,005.50, while the Shenzhen composite gained 9.68 points, or 0.49 percent, to 1,995. 60. Major indexes in Thailand, Singapore and the Philippines also traded lower. Oil prices fell on Friday as investors cashed in on a 6-percent rise in just one day after OPEC members agreed to reduce output for the first time in eight years to stifle a two-year price slide. Global benchmark Brent crude futures were down 41 cents at $48.83 a barrel by 8:30 a.m. ET (1230 GMT), but still nearly five percent higher than levels seen before the OPEC agreement on Wednesday. U.S. West Texas Intermediate crude futures were down 10 cents at $47.73 a barrel. On a weekly basis, Brent was up 6 percent, while WTI had climbed 7 percent. Gold rose on Friday as concerns about Deutsche Bank triggered a sharp sell-off in equities which undermined risk appetite, but a higher dollar limited gains. Spot gold was up 0.46 percent to $1,326.21 an ounce by 7:16 am ET. Gold has gained one percent so far this month, partly because of the weaker dollar after the U.S. Federal Reserve chose not to raise interest rates.