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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden (until 2.30) and Nick Fletcher

Deutsche Bank weighs on markets but Clinton rally limits damage - as it happened

The skyline of the City of London.
The skyline of the City of London. Photograph: David Levene for the Guardian

European markets end lower

Worries about Deutsche Bank vied with an attempted rally after Hillary Clinton was deemed by many pundits to have won the first presidential debate, leaving European markets in an uncertain mood.

For most of the day the concerns about the banking sector won out, but a revival in Deutache Bank itself - which ended the day unchanged - helped produce a mini-recovery.

US markets did better, helped by a strong set of consumer confidence figures.

And then there was the oil price, which fell sharply as the chances of a deal to curb output at this week’s producers’ meeting seemed to recede. Joshua Mahony, market analyst at IG, said:

European markets have confounded the initial enthusiasm generated off the back of the US presidential debate...This pessimistic continuation of Monday’s sharp losses says a lot about the expectations ahead of the oil-producers meeting conclusion. Today’s losses also say a lot about the wary nature of markets as we head into the business end of this election race, for we have seen before Donald Trump’s ability to defy any bumps along the way.

The final scores showed:

  • The FTSE 100 finished down 10.37 points or 0.15% at 6807.67
  • Germany’s Dax dropped 0.31% to 10,361.48
  • France’s Cac closed down 0.21% at 4398.68
  • Italy’s FTSE MIB fell 0.36% to 16,134.71
  • Spain’s Ibex ended down 0.27% to 8688.2
  • In Athens the Greek market lost 0.21% to 562.40

On Wall Street the Dow Jones Industrial Average is currently up 132 points or 0.7%.

Meanwhile in the oil market, Brent crude is down 3.2% at $45.79 while West Texas Intermediate has lost 3.4% to $44.36.

On that note, it’s time to close for the day. Thanks for all your comments, and we’ll be back tomorrow.

Mario Draghi, president of the European Central Bank, recently said there were too many banks in Europe, and now he has backing from a member of the Bundesbank:

As we reported earlier, the Mexican currency bounced back from record lows in the immediate aftermath of the US presidential debate, with Hillary Clinton deemed by many to have won the day. And it could recover further, reckon Capital Economics. The consultancy’s David Rees writes:

The Mexican peso appreciated by more than 2% against the US dollar shortly after the Democrat candidate, Hillary Clinton, appeared to prevail in the first US presidential debate on Monday.

The fortunes of the peso in recent months have been closely tied with the likelihood that the Republican candidate, Donald Trump, will triumph in the upcoming presidential election. That is hardly surprising, given that Mr. Trump has taken a particularly bellicose stance towards Mexico. And he has repeatedly talked about pursuing more protectionist trade policies, which would be bad news for Mexico’s open and US-dependent economy.

In the first instance, a victory for Mr. Trump on 8th November would probably cause the peso – and indeed most emerging market (EM) currencies – to weaken against the US dollar. And uncertainty regarding future trade policy, including a possible re-negotiation of the NAFTA trade accord, could weigh on the Mexican currency and ensure that it remains volatile.

But we do not believe that the worse fears of protectionism will be borne out...And once the dust settles on the US election and a probable Fed rate hike in December, we would not be surprised to see the peso stage something of a comeback in the next couple of years, as prior structural reforms help economic growth to finally build momentum.

And maybe there isn’t an oil deal after all:

The oil price continues to slide as the prospect of any deal to curb output at this week’s producers meeting in Algeria recedes. Despite the reported proposal to cut production by 1m barrels a day - to be discussed on Wednesday - it seems unlikely Iran will agree, keen as it is to return output to the levels it enjoyed before the economic sanctions on the country. Jasper Lawler, market analyst at CMC Markets, said:

The price of oil dropped on Tuesday, leaving the price of Brent crude within the $46-$48 range it has been in for the last week in the lead-up to the meeting in Algiers. The drop came as Iranian oil minister Zanganeh indicated that Iran was not willing to freeze oil output at current levels. More interestingly Zanganeh said Iran is targeting its pre-sanctions oil market share of 12-13%.

The assumption had been that Iran was targeting 4m barrel per day, but 12-13% of a higher OPEC total output since Iran was sanctioned implies a higher figure. Iran could be targeting something closer to 4.5-5m barrels per day in output, making a freeze agreement unlikely this year.

Brent crude is down 2.8% at $46.02 while West Texas Intermediate, the US benchmark, has lost 2.94% to $44.58.

Updated

Returning to the positive US consumer confidence figures, which seem to give more ammunition to the Federal Reserve to hike interest rates. Dennis de Jong, managing director at UFX.com, said:

Fed Chair Janet Yellen will be delighted to see an above-expectations rise in consumer confidence for September, which follows on from an already strong August.

Yellen was singled out for criticism by Donald Trump during last night’s presidential debate, with the presidential hopeful accusing Yellen of keeping interest rates low for political reasons. The question now is whether Yellen pulls the trigger on a rate hike at the next Fed meeting – which happens to take place just days before the polls open and America votes for its next president.

Updated

Back with oil, and the producers’ meeting in Algeria. The Wall Street Journal is reporting a deal would be put on the table involving an output cut of 1m barrels a day, but it is unlikely to be agreed tomorrow:

The positive US data seems to have help inspire Wall Street, with the Dow Jones Industrial Average now up 67 points or 0.37%.

US consumer confidence climbs

American consumers are not being put off by worries about the global economy, oil prices, Brexit or the forthcoming election, to judge from the latest Conference Board figures.

The consumer confidence index came in at 104.1, higher than the 99 reading analysts had expected and better than August’s 101.8. This is the best level since August 2007.

Lynn Franco, director of economic indicators at The Conference Board, said:

Consumer confidence increased in September for a second consecutive month and is now at its highest level since the recession. Consumers’ assessment of present-day conditions improved, primarily the result of a more positive view of the labor market. Looking ahead, consumers are more upbeat about the short-term employment outlook, but somewhat neutral about business conditions and income prospects. Overall, consumers continue to rate current conditions favorably and foresee moderate economic expansion in the months ahead.

Updated

The Markit survey may have shown an improvement in September but the outlook is not all rosy. Chris Williamson, chief business economist at IHS Markit said:

The service sector sent mixed signals in September, with faster growth of activity during the month offset by gloomy forward-looking indicators. Although business activity showed the largest monthly rise since April, inflows of new business slowed and employment growth was the weakest for three-and-a-half years. A drop in optimism about the year ahead to a near post-crisis low meanwhile cast a shadow over the outlook.

What’s more, even with the latest uptick in activity, the overall rate of economic growth remains subdued. Add these service sector results to the manufacturing data and the PMI surveys suggest that the economy is growing at an annualised rate of only around 1% again in the third quarter.

The slowdown in hiring means the survey results are consistent with a 120,000 rise in non-farm payrolls in September, which is a solid rate of expansion but somewhat disappointing compared to the gains seen earlier in the year.

The slowdown in hiring is perhaps a natural symptom of the economy reaching full employment, but companies also reported a reduced appetite to hire and job losses due to weaker inflows of new business and worries about the outlook.

US service sector
US service sector Photograph: IHS Markit

Updated

Back with the US, and more better than expected economic data.

Markit’s initial purchasing managers’ index for the service sector in September came in at 51.9, higher than the forecast 51.1 and August’s final reading of 51.

The composite index was up from 51.5 last month to 52.

The outlook for Deutsche Bank continues to be uncertain, analysts reckon. Carlo Mareels, a credit analyst at MUFG Securities, said:

We don’t see any immediate catalysts that could change the uncertain outlook on Deutsche Bank and the weakness in Deutsche Bank spreads is hard to reverse in the absence of proper constructive news on the capital story. Profitability will remain challenging but capital is certainly the most pressing factor right now.

We believe that the sub and senior will be subject to volatility but that they are essentially money good. On the AT1s [CoCo bonds] our central scenario is that they won’t switch off coupons, but it can’t be ruled out. We still see risk as significant and that needs to be priced in. However, if the Department of Justice’s fine is in the area of $6bn or higher, our view is that a capital raise will become necessary (which would most likely be very beneficial to the AT1s).

ABN Amro analysts believe significant restructuring is required:

Equity investors are fearful they will have to be called upon to support the capital position of the ailing Deutsche Bank (DB), as equity prices are down 64% since October 2015....

Crucially, despite restructuring, continual low and even negative net income quarters are draining the ability DB has to naturally increase its capital position. Their capital position needs to be improved, and the ability of it to achieve this naturally is being severely questioned. Significant restructuring, including major asset sales, will likely be needed if DB wishes to achieve an increased capital position without calling on shareholders.

The delayed sale of DB’s stake in Hua Xia will be vital to help facilitate a suitable capital position for this year end. However, this is not a silver bullet and would only add a temporary €1.6bn uplift to [its Tier 1 capital ratio]. So more is needed...

The payment request from the DoJ is just the tip of the iceberg of issues surrounding DB, as a number of other litigation suits remain open. The potential fines dwarf the €5.5bn DB have set aside for litigation.

AT1 coupons are potentially at risk dependent on the timing/amount of the recent DoJ fine. Anything over €6bn will cause real problems for the payments. At present, we believe, the bank could weather short term capital issues for AT1 write-downs not to be an issue... In February DB were adamant in protecting their AT1 investors, but it is something that may not be so happy with going forward as already embattled equity holders would get stung for providing this benefit.

The going concern for the company should be maintained provided the payment of the litigation charges is not demanded in the short term. We see a demand for the fines to be paid urgently as an unlikely scenario. It is both in the interest, of the bank to continue to function, and of the authorities to receive payment.

More on Deutsche Bank and the repercussions if there was to be state aid from Germany, with some saying the country’s finance minister Wolfgang Schaüble will be the key player:

Meanwhile Thomas Oppermann of the Social Democratic Party has weighed in:

As has Eurogroup president Jeroen Dijsselbloem:

Updated

Wall Street opens lower

The Clinton rally in US markets has fizzled out before it even began.

Banks - in the wake of Deutsche Bank’s share price fall - and Brexit continue to weigh on investors’ minds, while a fall in the oil price is also undermining confidence. With fading expectations of a deal to support the price at this week’s meeting of oil producers, Brent crude is down 2.66% at $46.09.

In early trading the Dow Jones Industrial Average has edged up just 5 points while the S&P 500 and Nasdaq have opened slightly lower.

US house prices have continued to rise sharply, perhaps dangerously so, according to the latest Case-Shiller index.

Prices rose by 5% year-on-year in July, slightly lower than June’s 5.1%.

That’s more than twice as fast as consumer price inflation. And David Blitzer of S&P Dow Jones Indices, which produces the report, reckons it can’t last.

“Given that the overall inflation is a bit below 2%, the pace is probably not sustainable over the long term.”

A Wall Street street sign is framed by an American flag hanging on the facade of the New York Stock Exchange.

Wall Street is expecting the next few weeks to be pretty fraught, in the run-up to the election on November 8th.

Art Hogan, chief market strategistat Wunderlich Equity Capital Markets, says:

“Volatility is going to be the norm, not the exception over the next several weeks.”

At one stage, we expected the US stock market to jump by around 0.7% at the open. But now we’re heading towards a flat start.

Reuters has now published the full quotes from Angela Merkel about the Deutsche Bank crisis:

German Chancellor Angela Merkel expressed hope on Tuesday that problems at Deutsche Bank could be solved after the lender made clear it needed no state aid with a $14 billion U.S. demand to settle claims it missold mortgage-backed securities.

Asked during a news conference if Berlin was concerned about Deutsche Bank and was considering assistance for the lender, Merkel said: “I only want to say that Deutsche Bank is a part of the German banking and financial sector. And of course we hope that all companies, also if they face temporary problems, can develop in the right direction.”

“I don’t want to comment beyond that,” she added.

Deutsche Bank said on Monday it had no need for German government help.

Wall Street is expected to open a little higher in an hour’s time, after New York has digested last night’s debate.

Court news.... A rogue trader who scammed investors out of millions of pounds to fuel a hedonistic lifestyle of nightclubs and champagne has been sentenced to an extra 603 days imprisonment.

Alex Hope, who was jailed for 7 years in 2015, incurred the extra penalty for failing to obey a confiscation order made against him.

He had been ordered to repay £166,696, but has actually only handed over £1,00 so far.

FCA director Mark Stewart says:

As a result of the work of the FCA, almost £2.65 million was identified and frozen in accounts controlled by Mr Hope, which was returned to investors earlier this year.

Mr Hope spent a significant proportion of the remainder of the funds on a lavish lifestyle, including gifts to family and friends. Under the Proceeds of Crime Act 2002, the value of tainted gifts can be recovered and Mr Hope was ordered to pay a sum equal to the value of the gifts he made to friends and family.

Hope’s outstanding penalty is accruing £36 interest per day, and he’ll still owe the full amount once released.

Here’s Hope back in January 2015 - he originally hit the headlines for running up a huge bar bill.

Updated

Merkel: Hope Deutsche Bank problems can be solved

German Chancellor Angela Merkel and the Prime Minister of Malaysia Najib Razak give a joint press conference following talks at the Chancellery in Berlin.
German Chancellor Angela Merkel and the Prime Minister of Malaysia Najib Razak give a joint press conference following talks at the Chancellery in Berlin. Photograph: John Macdougall/AFP/Getty Images

German chancellor Angela Merkel has told reporters in Berlin that she hopes the ‘temporary’ problems at Deutsche Bank can be solved.

She’s holding a press conference with Malaysia’s PM, Najib Razak.

But she doesn’t seem to have said much about the possible need for state aid to recapitalise the bank (something Deutsche insists isn’t needed).

Never work with animals, children, or the Scottish weather.

That’s the lesson from Grangemouth this morning, where energy company Ineos is celebrating the first arrival of its first shipment of US shale gas.

My colleague Rob Davies has raced to see the big moment, but reports that it’s too blustery for the boat to dock!

Rob’s still doing his best to keep us entertained, though:

Updated

The World Trade Organisation has added to the gloom this morning, by slashing its forecast for trade growth this year to just 1.7%, down from 2.8%.

That would be the first time since 2001 that trade has grown slower than the world economy.

The Royal Bank of Scotland Sign

Royal Bank of Scotland’s shares are getting a hoofing, down 4% today.

It’s being hit by the worries over Deutsche Bank; RBS is also facing the prospect of a large penalty from the DoJ, for mis-selling toxic mortgage securities.

Conner Campbell of SpreadEx says:

The German bank is now down another 3%, and is threatening to drop under €10 for the first time in around 30 years. This has sparked another round of losses in the European banking sector, with Barclays, HSBC and Societe Generale all seeing notable declines.

Royal Bank of Scotland actually surpassed Deutsche Bank’s morning drop, percentage-wise at least, with investors fearful that the same kind of fine could hit RBS when its settlement with the US Department of Justice is finally revealed.

That rally in the Mexican peso is fizzling out too, as the Clinton debate bounce comes to a halt:

The sudden swings in the markets this morning show that volatility is back with a bang.

With the US presidential election still up for grabs, and Deutsche Bank still troubled, this could be a wild autumn.

FXTM research analyst Lukman Otunuga is concerned that this morning’s ‘Clinton bounce’ didn’t last:

Stock markets received a slight welcome boost on Tuesday with most major arena’s swinging back into gains as talks of Hillary Clinton winning the first US presidential debate renewed risk appetite. Although Asian equities managed to charge into green territory post-debate, gains were swiftly relinquished in Europe amid the heavy losses in banks and carmakers.

Wall Street could be exposed to steeper losses if the bearish domino effect from Europe provides a solid foundation for sellers to attack. It is becoming increasingly clear that the short term gains observed in stocks are becoming unsustainable with the ingredients of bear market potentially leaving stock markets exposed to heavy losses in the future.

Updated

If this selloff continues, Deutsche Bank shares will fall below the €10 mark for the first time in three decades:

The Financial Times is reporting that one of Germany’s smaller banks has cancelled a bond sale, in a sign of edginess in the markets.

Here’s a flavour:

A regional German bank has pulled a bond sale citing “market conditions”, as Deutsche Bank shares have tumbled to fresh multi-decade lows.

NordLB was due to sell a seven-year senior unsecured bond, but informed investors they would not proceed on Tuesday morning, report Thomas Hale in London and James Shotter in Frankfurt.

The senior unsecured bond was initially expected to price around mid-swaps plus 90 basis points.

The pulled Landesbank bond comes after Lufthansa also cancelled a debt sale on Monday, also pointing to the “pricing achievable in the current market”

Deutsche Bank hits fresh lows

The headquarters of Deutsche Bank in Frankfurt, Germany.
The headquarters of Deutsche Bank in Frankfurt, Germany. Photograph: Hannelore Foerster/Getty Images

Oh dear, this morning’s stock market rally is fizzling out -- before some Europeans have fully caught up with the drama in America.

Deutsche Bank is to blame -- its shares have slipped to fresh record lows in the last few minutes. Currently down 2.65% at €10.29, a level not seen since the 1980s.

This has send Germany’s stock market down 1% into the red, and erased the early gains in London too.

Worries about Deutsche Bank’s financial strength are, well, trumping any relief following last night’s debate.

Other European banks are also falling, with Germany’s Commerzbank down 2.9%.

Jasper Lawler of CMC Markets explains:

Declines in prominent German and Swiss banks have revived fears of a European banking crisis.

Stocks had opened moderately higher in a small nod to establishment candidate Hilary Clinton winning the US presidential debate.

As explained earlier, investors are worried that Angela Merkel might not step in to protect Deutsche from the possibility of a $14bn fine from US authorities.

Deutsche’s market value is now just $16bn, meaning it could struggle to raise enough capital to pay off the fine.

Writing in the Telegraph today, Matthew Lynn argues that the situation is terribly serious:

If the German government does not stand behind the bank, then inevitably all its counter-parties – the other banks and institutions it deals with – are going to start feeling very nervous about trading with it.

As we know from 2008, once confidence starts to evaporate, a bank is in big, big trouble. In fact, if Deutsche does go down, it is looking increasingly likely that it will take Merkel with it – and quite possibly the euro as well.

More here: The Deutsche Bank crisis could take Angela Merkel down – and the Euro

The surge in the Mexican peso shows that investors are pleased with Clinton’s performance, says Ana Thaker, market economist at PhillipCapital UK.

She says:

A vote for Clinton is considered a vote for the status quo and markets will welcome sustained accommodating monetary policy under her administration.

City investors have been backing Hillary Clinton to win November’s election, according to IG:

Gambling firm Betway have also cut the odds of a Clinton victory, to just 2/5:

Betway’s Alan Alger, said:

“Donald Trump was forced to backtrack and defend himself against Hillary Clinton for much of last night’s debate. The betting now firmly suggests the Democrat candidate has stretched her lead in the race to the White House.

“Clinton may have appeared weak during her bout of ill health earlier this month, but punters think she looked strong last night and we’ve cut here odds from 4/6 to 2/5.

“Those that think the Donald can talk his way back into the election battle can take 15/8 – the longest his odds have been in over a fortnight.”

However... we have been here before, in June, when the betting markets suggested Britain would remain in the EU.

Back to last night’s debate... and Robin Bew of the Economist Intelligence Unit argues that Donald Trump didn’t do too badly:

But The Economist itself reckons the Republican gaffed over his tax bill:

FT editor Lionel Barber also calls it for Clinton:

And polling expert Nate Silver shows how Trump kept shoving his oar in:

It’s a bad morning for British workers at building supplies firm Wolseley.

It has announced plans to close 80 UK stores, with the loss of 800 jobs, as part of a major restructuring. It hopes to redeploy some workers, but the axe could fall heavily at its distribution centre in Worcester.

Wolseley shares have slumped by 3.8% this morning, after it also missed profit expectations.

Deutsche Bank shares flat after Monday's slump

In other news....Deutsche Bank’s shares are becalmed this morning, up just 0.1% at €10.31, after yesterday’s 7.5% tumble.

Investors were rattled on Monday, following reports that German chancellor Angela Merkel was refusing to provide state aid to the lender. Deutsche Bank insists that it hasn’t even asked for help, but with a $14bn fine looming – close to Deutsche’s market value – the situation is tough.

City veteran David Buik says the uncertainty over Deutsche is worrying:

I feel sorry for CEO John Cryan who inherited a hospital pass, when he stepped up to the plate in June 2016. These shares have lost significant value – down from €39 in January 2014 and €23.51 a year ago to €10.64 – down 71% and 54% respectively. Just to put some meat on the bone in July 2007 Deutsche Bank’s share price was €99.60!

What markets cannot cope with is uncertainty and that sensation is there in spades, with John Cryan, probably very frustrated in being able to say very little.

Updated

You can catch up with all the Guardian’s coverage of the debate here:

US Election 2016

Here’s our expert panel verdict:

And here’s David Smith’s account of how Clinton scored points against her rival:

Hillary Clinton called Donald Trump to order on Monday night in probably the most watched – and certainly the weirdest and wildest – presidential debate in American history. She demanded explanations over his tax returns, his treatment of workers, his temperament as the man with his finger on the nuclear trigger. As he ducked and dived with incoherent excuses, she stared at him with thinly veiled contempt.

Then, right at the end, like a long-suffering, frosty school principal, she decided to expel the ranting, sniffling, whining 70-year-old schoolboy who had not done his homework.

Trump had said she did not have the stamina to be president. Icy and deadly, Clinton replied: “Well, as soon as he travels to 112 countries and negotiates a peace deal, a ceasefire, a release of dissidents, an opening of new opportunities in nations around the world or even spends 11 hours testifying in front of a congressional committee, he can talk to me about stamina.”

Canadian dollar gets a lift

The flag of Canada.

The Canadian dollar has also strengthened, in another sign that Clinton performed better last night (in the markets’ view, anyway).

Arnaud Masset, analyst at Swissquote Bank, explains:

The foreign exchange market reacted sharply to yesterday’s first US presidential debate.

Emerging market currencies were broadly better bid, especially the Mexican peso but it was the Canadian dollar, which appreciated the most as experts concurred that Hillary Clinton had won this first round.

The Canadian dollar was also in demand after the debate with USD/CAD falling back below the 1.32 threshold, down to 1.3166.

Updated

Miss the debate? Watch it here....

Here are some video clips of last night’s debate, for those European readers who weren’t awake in the middle of the night

Donald Trump defends ‘birther’ stance: ‘I think I did a good job’
Clinton corners Trump over refusal to release tax returns

Updated

FXTM Chief Market Strategist Hussein Sayed says the markets have awarded last night’s debate to the Democratic candidate, but it’s not all over....

Round one of the U.S. presidential debate is over and as expected big punches were exchanged from both sides, but clearly no knockout blows were landed.

Although polls were showing different outcomes of who won the debate, financial markets obviously declared Clinton as the winner.

Asian shares recovered some of yesterday’s losses and European stocks opened higher, meanwhile U.S. futures are also indicating a positive open. However, the best financial asset proxy to the U.S. presidential race is the Mexican Peso which rose by more than 1.5% against the U.S. dollar after declining to a new record low yesterday. The higher the Mexican currency goes suggests higher probability for Clinton reaching the White House as Trump repeatedly raged against globalisation and free trade agreements.

The Aussie, Kiwi and Yen also supported the opinion that Hillary Clinton won the first presidential debate.

Kit Juckes of Societe Generale agrees:

A snap poll by CNN/ORC has found that Hillary Clinton won last night’s debate, pretty conclusively.

They report that:

Hillary Clinton was deemed the winner of Monday night’s debate by 62% of voters who tuned in to watch, while just 27% said they thought Donald Trump had the better night, according to a CNN/ORC Poll of voters who watched the debate.

That drubbing is similar to Mitt Romney’s dominant performance over President Barack Obama in the first 2012 presidential debate.

Voters who watched said Clinton expressed her views more clearly than Trump and had a better understanding of the issues by a margin of more than 2-to-1. Clinton also was seen as having done a better job addressing concerns voters might have about her potential presidency by a 57% to 35% margin, and as the stronger leader by a 56% to 39% margin.

CNN snap poll
CNN snap poll Photograph: Bloomberg TV

Peso jumps back from record low

If you want a clear sign of which candidate won last night’s debate, in investors’ eyes, then look at the Mexican currency.

The Mexican peso has surged overnight, gaining 1.5% against the US dollar. That’s a decent recovery from the record low it plumbed yesterday.

That means $1 is worth 19.575 peso, down from 19.9 peso before the debate began.

The peso has become the market’s preferred measure of tracking the chances of a Trump victory, given his attacks on free trade and his pledge to build a wall on the US-Mexico border.

Asian stock markets also rose overnight, as Trump and Clinton swapped blows over everything from the Trans-Pacific Partnership to the ‘Birther row’ over Barack Obama’s origins.

Tokyo’s Nikkei jumped 1%, the Hong Kong Hang Seng gained 1.3%, and China’s main markets closed 0.6% higher.

And that’s feeding through to Europe’s markets this morning, as this graphic shows:

The European and Asian markets today
The European and Asian markets today Photograph: Thomson Reuters

European shares open higher after Clinton vs Trump

Democratic presidential candidate Hillary Clinton shakes hands with Republican presidential candidate Donald Trump on stage at the conclusion of the first presidential debate at Hofstra University.
Democratic presidential candidate Hillary Clinton shakes hands with Republican presidential candidate Donald Trump on stage at the conclusion of the first presidential debate at Hofstra University. Photograph: ddp USA/REX/Shutterstock

Shares are rallying across Europe this morning, as investors digest the first US presidential debate (which took place while most of them were asleep).

In London, the FTSE 100 index has gained 26 points or 0.4% in early trading. European markets are showing bigger gains, with the Paris market up by 0.7%.

Traders appear to be taking the view that Hillary Clinton came out best yesterday, after a 90 minute battle in which Donald Trump lost his cool more than once.

Although Clinton didn’t deliver a knock-out blow, the Democratic candidate did seem more sure-footed on the key issues.

Conner Campbell of SpreadEx points out that we’ve not recovered all of Monday’s losses yet:

With Clinton seemingly stumping Trump in the first presidential debate a semblance of calm has returned to the markets.

Yesterday saw a series of market-wide declines prompted, among other things, by the reminder that come November Donald Trump could be the new President of the United States of America. This morning, however, the European indices have taken anywhere between 0.6% and 0.8% back, arguably thanks to Hilary Clinton’s better received performance at last night’s debate.

Whether or not that translates to a boost in the polls, especially given the contrarian, disenfranchised mind-set of many of Trump’s supporters, is unclear (perhaps explaining why the market’s good mood isn’t as good as its bad mood was bad on Monday). For now, however, the European indices are rebounding and, considering Brent Crude is flat and Deutsche Bank is still effectively at all-time lows, it’s hard not to pin the turnaround on the results of yesterday’s presidential nominee showdown.

The agenda: Debate aftermath, and Deutsche Bank

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Investors have a lot to think about today, both in the financial markets and the world of politics.

Firstly, the US presidential race has gathered steam overnight after a bruising clash between Hillary Clinton and Donald Trump. The two candidates to take control of the White House traded blows over economic policy, trade, and climate change.

Personal issues, including Trump’s coyness to release his tax returns and Clinton’s deleted emails, added extra spice to the battle.

Listening under the duvet in Britain, the Democratic candidate appeared to outshine her rival. But here’s what my US colleagues thought:

Donald Trump’s freewheeling approach spun wildly out of control in the first presidential debate as he was forced on the defensive during a chaotic clash with Hillary Clinton.

Goaded by Clinton and pressed hard by moderator Lester Holt, the Republican nominee angrily defended his record against charges of racism, sexism and tax avoidance for much of the 90-minute clash at Hofstra University, outside New York.

Trump hit Clinton on trade and her political record – issues that have helped him draw level in recent polls and may yet dominate the election – but the property tycoon appeared thin-skinned and under-prepared as he sniffled his way through the debate.

Clinton shows strength over Trump in one of history’s weirdest, wildest debatesRead more

“It’s all words, it’s all soundbites,” he retorted after a particularly one-sided exchange, adding that Clinton was a “typical politician: all talk, no action”.

More here:

And here:

Closer to home, traders are watching Germany’s largest bank with growing concern.

Yesterday, Deutsche Bank’s shares hit their lowest level in a generation as it fought to persuade investors that it doesn’t need to be bailed out by the Berlin government.

But Deutsche Bank still faces the threat of a $14bn fine for mis-selling US mortgage securities, so concerns over its future aren’t going away.

And then there’s the oil price; energy ministers are expected to hold an informal Opec meeting on Wednesday to discuss a potential deal to cap production. Brent crude rallied late last night, on hopes

Also coming up today

Britain’s business leaders are gathering for the Institute of Directors’ annual convention. We’re expecting to hear a lot about Britain’s exit from the European Union, after fears of a ‘Hard Brexit’ sent the pound down to a five-week low yesterday.

At 11am BST, the CBI publishes its retail sales figures for September. That will show if consumers kept spending despite Brexit uncertainty.

The latest US house prices figures are due at 2pm BST (9am in New York), followed an hour latest by the consumer confidence stats.

And in the City, we’re getting results from holiday group Thomas Cook and building supplies firm Wolseley.

Updated

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Many people reach for a multivitamin every morning thinking they perform a massive favor for their body. We often grew up believing that a daily pill served as the ultimate insurance policy against a poor diet. However, a growing number of medical professionals now sound the alarm about the supplements…
Budget and the Bees
Budget and the Bees
Stephen Colbert to co-write new Lord Of The Rings film
Colbert, known for hosting The Late Show With Stephen Colbert, partnered with filmmaker Sir Peter Jackson to write a new film for the franchise.
Evening Standard
Evening Standard
10 Years Later, The DCEU’s Strangest Moment Reveals A Fascinating Comic Book Retcon
The oddest part about 'Batman v Superman' is all about the twist that saves the day. Why do two moms have the same name?
Inverse
Inverse
Why is the US so expensive? Everything comes in a ‘premium’ version, from doctors’ appointments to movies
Want a good view of the cinema screen? You’ll need to sign up to the VIP scheme. A quick chat with your doctor? An extra $50,000 will let you jump the queue, writes Arwa Mahdawi
The Guardian - UK
The Guardian - UK
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