Asian markets up as Deutsche fears ease
ASIAN markets rallied yesterday with financials up on easing fears about the future of German giant Deutsche Bank after a source said it was nearing a deal to slash a multi-billion-dollar US fine.
Traders fled for cover last week after US officials slapped the lender with a US$14 billion charge over its role in the subprime mortgage crisis.
However, news on September 30 that the German bank was near an agreement to pay a much more manageable $5.4 billion to resolve the case lifted markets.
“A lot of the market sentiment has improved because obviously people were worried that Deutsche Bank might be going to re-create the Lehman moment,” said Andrew Sullivan, managing director for sales trading at Haitong International Securities Group in Hong Kong, referring to the US bank whose fall precipitated the financial crisis.
“The fact that Deutsche Bank actually came out and said it’s well capitalised and close to securing a deal with US Department of Justice over that fine has given the market more confidence that we’re not going to have another breakdown in the global banking system,” he said.
In Japan, the Nikkei ended 0.9 percent higher, with investors brushing off the closely watched Tankan survey showing Japanese business confidence at its lowest in three years.
Hong Kong gained 1.2pc, Sydney closed 0.8pc higher and Jakarta put on 1.3pc. There were also gains in Taipei and Manila. The advance tracked a rally on US and European markets.
Investors also welcomed the weekend release of a gauge of Chinese factory activity that indicated continued improvement in the world’s number two economy.
Among the main winners were banks, with Sydney-listed Commonwealth Bank up 1.5pc, while HSBC was up 1.6pc in Hong Kong. Mitsubishi UFJ Financial Group added 0.4pc in Tokyo.
Shanghai, Seoul and Kuala Lumpur were closed for public holidays.
In currency markets, the pound slid against the dollar after British Prime Minister Theresa May set a timetable to leave the European Union by 2019.
The announcement sets up Britain for years of horsetrading after June’s shock referendum vote to leave the EU.
Sterling fell to $1.2870 – its lowest since June while it also eased to 1.1446 euros.
“We’re back to the Brexit risks,” said Vishnu Varathan, a senior economist at Mizuho Bank in Singapore. –