Europe’s bank angst sours Clinton-fuelled rally of equities
london — Worries about Europe’s banks wrenched stocks into reverse on Tuesday and halted a surge in Mexico’s peso that followed Democrat Hillary Clinton’s victory over Republican Donald Trump in the first US presidential debate.
Europe’s mood soured as Deutsche Bank shares hit another record low on nagging worries about the lender’s health and left Wall Street futures pricing in barely a rise for the S&P 500 and Dow Jones Industrial.
For markets the clear victor was the Mexican peso, which surged as much as 2.3 per cent after hitting an all-time lows on fears that a Trump presidency would threaten Mexico’s exports to the US, its single biggest market.
Those gains had been pruned to just over 1.6 per cent before the start of US and Mexican trading although the currency didn’t look keen to give back much more.
“The Mexican peso has become the main market proxy for Trump on-Trump off,” said Saxo Bank’s head of FX strategy John Hardy, pointing to its near 9 per cent fall versus the dollar this year.
Deutsche Bank wasn’t the only European banks in the firing line. Shares in UK-based Standard Chartered fell 2.5 per cent on reports that it was facing a US probe over an Indonesian investment.
The euro fell for the first time in five days, slipping 0.25 per cent to $1.1225 and to 1.1563 per pound.
In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan had recouped early losses to rise 0.6 per cent and Japan’s Nikkei swung 0.8 per cent higher, having been down 1.5 per cent at one stage.
The US dollar rebounded as high as 100.83 yen from a one-month low around 100.08 though it was fading again in the first flurry of New York trading as European banking sector strains returned.
Brent crude futures slipped just over $1 or 2.2 per cent to $46.30 a barrel, having jumped or 3.2 per cent in the previous session. US West Texas Intermediate (WTI) crude, which had seen a similar rise, fell 95 cents to $44.99.
Spot gold was down 0.2 per cent at $1,335.34 an ounce at 1136 GMT, snapping a six-day winning streak. US gold futures eased 0.3 per cent to $1,340.80 an ounce. —