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

Stock markets drop ahead of US presidential debate – as it happened

Wall Street, in New York, with a statue of George Washington on the left.
Wall Street, in New York, with a statue of George Washington on the left. Photograph: Mark Lennihan/AP

Closing post: Wall Street closes in the red

Ding ding ding.... the closing bell on the New York stock exchange has been rung.

And the US stock market has lost almost 1%, as investors brace for tonight’s clash between the two candidates to become US president.

The Dow Jones industrial average lost 166 points, or 0.91%, with almost every component dropping. Banks were the big fallers (who caught a cold from the troubles at Deutsche Bank).

Closing prices on the Dow tonight
Closing prices on the Dow tonight Photograph: Thomson Reuters

The S&P 500 and the Nasdaq both dropped by 0.8%, following heavier losses in Europe with Britain suffering its worst day since late June.

And as we covered earlier,

But now, there’s nothing more that investors can do. They must just wait to see how the first presidential debate plays out. And with the polls so close, it could be a real classic....

My colleagues will be live-blogging all the action here:

I’ll be back in the morning to see how the markets react. Until then, good nght and thanks for reading and commenting. GW

Updated

Donald Trump hasn’t released a massive amount of detail about his policy platform if he becomes president.

That’s one reason the markets are nervous about the presidential race.

But despite that, City firm Columbia Threadneedle have taken a stab at the potential impact of a Trump victory.

Potential impact of a Trump presidency

They reckon infrastructure providers should benefit, if Trump does launch a massive programme of building more roads, bridges, and the like.

But that means more borrowing, which could get expensive.

Mark Burgess of Columbia explains:

Trump has made some disconcerting comments regarding a lack of commitment to debt repayments.

If a substantial global event like the financial crisis were to occur again, this may mean domestic debt is paid while foreign debt remains outstanding. Could this deter investors?

This would be particularly unfortunate as Treasury issuance is likely to increase significantly in order to fund the various costly proposals as the US racks up larger deficits.

Richard Scalone, co-head of foreign exchange at TJM Brokerage in
Chicago, says US election uncertainty isn’t helping the dollar.

He told Reuters that:

“Most market participants are waiting to see what comes out of the debate tonight and will take their cue from there.”

US Treasuries (American government debt) have rallied today, on nervousness ahead of tonight’s debate.

This has pushed the yield (or interest rates) on 10-year Treasury bonds down to 1.587%, from 1.6% on Friday.

It’s another sign that investors are looking for safety tonight.

As Kim Rupert, managing director for fixed income at Action Economics in San Francisco, put it:

“A lot of the gains in Treasuries are safe-haven trades....Stocks are also looking pretty weak with a lot of concerns about financials with Deutsche Bank.”

Hillary Clinton has a five point lead over Donald Trump, according to the latest weekly tracking poll from NBC News.

But that follows a Bloomberg poll this morning putting the two candidates level (and Trump ahead, in a four-way fight).

And polling expert Nate Silver believes it is too close to call:

Updated

Stocks are still down on Wall Street, with just under an hour to go until the closing bell.

The Dow is currently off 159 points, or 0.8%, at 18101 -- a level it’s been hovering around for most of the day, really. The S&P 500 and the Nasdaq are showing similar losses.

Bank shares continue to get a kicking; Goldman and JP Morgan are both down 2.5% (due to the worries over Deutsche Bank).

Walt Disney is now among the fallers too, down 1.7%, following a report it might bid for Twitter.

CNN aren’t pulling their punches -- they predict that stock markets will probably tumble on Tuesday if Trump wins tonight’s debate.

Here’s a flavour:

Wall Street doesn’t want a President Trump (with the exception of a few hedge fund managers and Trump supporters, like Carl Icahn). As the old saying goes, the market loves good news, it can deal with bad news, but it hates uncertainty. And Trump is the motherlode of uncertainty.

“The typical investor just can’t contemplate the possibility of a Trump victory,” says Cary Leahey, chief U.S. economist at Decision Economics....

So the closer the race gets, the more worried investors become....

“If for some reason Trump puts on a presidential showing...and Clinton stumbles for whatever reason, then the market may take another reassessment,” says Leahey. That’s the polite way of saying, stocks are likely to fall.

More here:

Donald Trump’s protectionist rhetoric is a particular worry for Wall Street.

CNBC’s Elizabeth Gurdus reports that:

“I think neither candidate has super market-friendly policies,” Dean Curnutt, CEO of Macro Risk Advisors, said on CNBC.

“Both have been reasonably anti-trade. Clinton was pulled pretty far left by Bernie Sanders. Trump’s policies really resemble very little of what we typically associate with free-market Republicanism.”

Trump’s attacks on Federal Reserve chair Janet Yellen add another dollop of instability to the pot. If he wins in November, Yellen might not bank on getting a second term.

Mexico’s manufacturers might want to raise a glass to Donald Trump; by weakening the peso, he’s made their exports much more competitive:

The US dollar is already dropping against the yen, even before the two nominees take to the stage in New York.

One dollar now gets you 100.29 yen in the FX market, down 0.7% compared to Friday, when your greenback was worth 101.1 yen.

That won’t amuse the Tokyo government much; Japan wants to weaken its currency to push inflation up.

The US, Canada, Brazil and Mexico stock markets are all down today, following losses across Europe.

It’s more of an adjustment than a rout, though - with Wall Street losing less than 1% so far.

Most European market shed less than 2% (they’re all closed now)

The main US and European markets today

Updated

There could be a surge of money into safe-havens if Donald Trump outperforms expectations on tonight’s debate, City experts say.

Chris Beauchamp of IG predicts that the Japanese Yen and US government bonds (Treasuries) could both benefit:

Tonight’s US presidential election debate is a major event for financial markets, with risky assets likely to see significant volatility, should Trump manage to further build on the gains he has made over recent weeks.

Despite significant movements towards Trump in recent polls, IG clients perceive there still to be a 62% chance of a Clinton win, according to the IG binary market. That being said, Hilary remains a somewhat uninspiring personality and there is a distinct risk that tonight’s debate could see the polls tighten even further, thus driving investors towards havens such as the yen and Treasuries.

Mexican Peso under fire

Some investors are looking at the Presidential Race as a serious chance to make money. The rest are just worried about losing what they’ve already got.

But how do you trade, say, a Donald Trump victory?

Well, Mexico’s currency has emerged as a surprise proxy for the Upset To End All Upsets. When Trump does well, or Hillary Clinton has a bad day, the Mexicon peso often takes a pasting.

This chart shows how the peso has weakened since April, from 17 to the $1 to almost 20/$1 today.

And the pressure is getting worse -- bets against the poor old Peso have hit a record high and the cost of insuring against future losses has spiked.

Trump’s vow to build a wall on the Mexican border means the country is at “the sharp end of ‘Trump risk’”, says Nicholas Spiro a partner at London-based Lauressa Advisory Ltd.

More here:

Mexican Peso Shorts at Record Ahead of U.S. Election Debate

Updated

Fear Index jumps

Volatility is also rising on Wall Street today as the race to the White House hots up.

The CBOE Market Volatility index, or VIX (commonly known as the “fear gauge”) is up 1.9% today - the biggest rise in a fortnight.

Reuters has more details:

With just over six weeks until Election Day, some investors see a toss-up contest creating volatility in certain sectors, including health insurers, drugmakers and industrials.

“Investors are acting extremely nervous with regards to the debate ... and it highlights the fact that the markets are not focusing on the health of the economy, interest rates and geopolitical events,” said Robert Pavlik, chief market strategist at Boston Private Wealth.

Updated

Banks lead Wall Street lower

Wall Street banks Goldman Sachs and JP Morgan are the biggest fallers on the Dow Jones industrial average today.

They’re both down around 1.8%, as financial stocks suffer from worries over the health of Germany’s Deutsche Bank.

Consumer group Procter & Gamble and tech giant Apple are among the few risers, but most stocks have dropped as investors await for tonight’s debate (in just under 8 hours time).

The top risers (left) and fallers (right) on the Dow today.
The top risers (left) and fallers (right) on the Dow today. Photograph: Thomson Reuters

Over in Greece the former deputy premier Evangelos Venizelos has warned the country faces political, social and economic disintegration as financial indicators worsen and the government scrambles to push through long overdue reforms. Helena Smith reports from Athens:

Venizelos, finance minister at the height of the Greek debt crisis, issued a withering assessment of the government’s performance in office.

In a speech to businessmen on the future of Greece at the Thessaloniki chamber of commerce and industry the politician said the country was in danger of “institutional, economic and social collapse” because the leftist-led coalition lacked a strategic plan to exit its long-running debt crisis.

Venizelos
Venizelos Photograph: Yiorgos Karahalis / Reuters/REUTERS

Instead, he claimed, ministers were working to the slogan “we are doing well and will do better” and were turning a blind eye to real problems as the nation’s real economy plummeted. “The government is making out as if it doesn’t understand how critical things are. Its theory ‘we are doing well and will do better’ is a spring that will pop up.”

Venizelos, whose Pasok socialist party was in office with the main opposition conservatives until being ejected by Syriza, the radical left group led by prime minister Alexis Tsipras, spoke as the government prepared to push more creditor-mandated reforms through parliament tomorrow.

Some €2.8bn worth of aid is at stake. After a summer of little progress, the aim is for parliament to legislate on the 15 milestone actions by the time the Euro Working Group meets on Thursday. The reforms, which include appointment of officials to a new privatisation fund’s supervisory board, are expedient if a second bailout review is to begin and debt relief talks officially opened.

Earlier on Monday the European Commission Vice-President Valdis Dombrovskis said the thrice-bailed out nation had been forced to endure more punitive austerity than otherwise necessary because of Tsipras’ populist pledge to end the policies when he assumed power in January 2015.

Dombrovskis
Dombrovskis Photograph: Vincent Kessler/Reuters

“Populism doesn’t solve problems. Populism creates problems,” he told a conference in Riga. “We could see that in the … classical example of Greece. A new government came with a populist stance, that ‘we don’t need any austerity regimes, we will spend as much as we want’ … and, in fact, Greece now implements tougher austerity measures than it would have been necessary if [reforms] of the previous government were continued at the time.”

Meanwhile:

Updated

Britain will get no favours in Brexit talks, hints Draghi

Britain will get no favours in the Brexit discussions, ECB president Mario Draghi hinted in his testimony to the European parliament. In his opening speech Draghi - the latest to suggest Europe will take a tough line in the negotiations - said:

Regardless of the type of relationship that emerges between the European Union and the United Kingdom, it is of utmost importance that the integrity of the single market is respected. Any outcome should ensure that all participants are subject to the same rules.

He added (as quoted by Bloomberg):

It is very hard to imagine that any agreement that will be perceived as discriminatory against some subjects or in favor of other subjects could be a source of stability for the future of our EU.

European markets end lower

A cocktail of concerns - from the forthcoming US presidential debate to worries about Brexit to uncertainty over the outcome of the current oil producers meeting in Algeria to a new drop in Deutsch Bank shares - combined to send European markets sharply lower at the start of the trading week. The final scores showed:

  • The FTSE 100 finished down 91.39 points or 1.32% - its biggest one day percentage fall since the immediate aftermath of the Brexit vote - at 6818.04
  • Germany’s Dax dropped 2.19% to 10,393.71
  • France’s Cac closed 1.8% lower at 4407.85
  • Italy’s FTSE MIB fell 1.58% to 16,192.48
  • Spain’s Ibex ended down 1.27% at 8711.4
  • In Greece, the Athens market lost 1.82% to 563.59

On Wall Street, the Dow Jones Industrial Average is currently down 143 points or 0.78%.

Updated

Bookmaker Ladbrokes has sent its buzzword bingo odds for the presidential debate, and here they are:


1/10 Make America Great Again

1/5 Commander In Chief

1/2 Lying

1/2 Putin

4/6 Crooked

Evens Pneumonia

Evens Pennsylvania

Evens Terrific

5/4 Mexico’s Gonna Pay For It

6/4 Unbelievable

6/4 Reagan

6/4 Basket Of Deplorables

2/1 Racist

2/1 Founding Fathers

2/1 You’re Fired

3/1 Washington Bubble

4/1 Total Loser

5/1 Brexit

5/1 Give Me A Break

10/1 Monica Lewinsky

20/1 How the Hell Should I Know

20/1 How’s Your Cold

33/1 You’re No Jack Kennedy

Some good news for Hillary and the reverse for Trump:

Back with the race to become US president, and the market’s reaction ahead of the head-to-head debate, Jasper Lawler, market analyst at CMC Markets, said:

Stocks in the US opened lower. A number of forecasters have raised their odds of a Donald Trump presidency ahead of the first of the presidential debates Monday evening. It’s Clinton the Wall Street darling versus Trump the Wall-builder.

With shares near highs of the year, it seems fair to say that markets have so far discounted the probability of a Donald Trump victory. Mrs Clinton is seen as a continuation of the status quo, which hasn’t exactly provided stellar growth and economic opportunity for America’s poorest in the last decade. Donald Trump wants to shake up the status quo, from a market’s perspective that necessarily means uncertainty.

Meanwhile IG still reckons Hillary Clinton is still more likely to win the election. IG’s market analyst Joshua Mahony said:

Tonight’s US presidential election debate is a major event for financial markets, with risky assets likely to see significant volatility, should Trump manage to further build on the gains he has made over recent weeks.

Despite significant movements towards Trump in recent polls, IG clients perceive there still to be a 62% chance of a Clinton win, according to the IG binary market. That being said, Hilary remains a somewhat uninspiring personality and there is a distinct risk that tonight’s debate could see the polls tighten even further, thus driving investors towards havens such as the yen and Treasuries.

Updated

Asked about Deutsche Bank - whose shares have fallen sharply today - Draghi refuses to comment.

And on Brexit, he says the ECB does not have an official role in the negotiations but may work in an advisory capacity.

Updated

In questions Draghi repeats this theme:

It is clear other policies should complement monetary policy action to reap all the benefits of the present monetary policy stance.

He adds that if other policies are in place, the time for monetary policy stance to be successful would be shorter.

And he admits that having low interest rates for longer would have side effects on financial stability.

Updated

Governments have to "unleash growth" - Draghi

In his conclusion Draghi again suggests the ECB needs others - politicians particularly - to step up and do their bit for the EU:

For the euro area to thrive, actions by national governments are needed to unleash growth, reduce unemployment and empower individuals, while offering essential protections for the most vulnerable....

The political commitment underpinning our single currency has been strongly reaffirmed during the crisis. Important efforts have been made.

But widespread feelings of insecurity, including economic insecurity, remain a major concern. We cannot simply wait for better times: we need to renew our efforts to ensure that Economic and Monetary Union offers protection and prosperity. The ECB will do its part.

Draghi at the European Parliament
Draghi at the European Parliament Photograph: European Parliament

Updated

On the effect of low (and indeed negative) interest rates, he said:

Low rates are a symptom of the underlying economic situation. They reflect weak long-term growth trends and the protracted macroeconomic slump that has resulted from the crisis.

The ECB’s monetary policy has provided significant accommodation to limit the negative effects of the global and euro area-specific shocks on the economy, thereby mitigating their disinflationary impact.

Nevertheless, monetary policy cannot determine the sustainable level of real interest rates in the long run, as they in turn depend on long-term growth prospects.

This means that other policy actors need to do their part, pursuing fiscal and structural policies which will contribute to a self-sustaining recovery and increase the economic growth potential of the euro area, as I discussed with you in June.

EU economy "resilient" so far after Brexit - Draghi

Mario Draghi’s opening remarks to the European Parliament have been released, and the European Central Bank president said that so far the European economy has stood up to the challenge of Brexit, so far:

The recovery in the euro area is expected to continue at a moderate and steady pace, but with slightly less momentum than envisaged in June.

On the positive side, incoming information continues to point to the euro area economy being resilient to global and political uncertainty, notably following the UK referendum outcome. The initial impact of the vote has been contained and the strong financial market reactions, such as equity price falls, have largely reversed....

The extent to which the economic outlook will be affected depends on the timing, development and final outcome of the upcoming negotiations. So far, the euro area economy has been resilient, but due to this uncertainty our baseline scenario remains subject to downside risks.

Regardless of the type of relationship that emerges between the European Union and the United Kingdom, it is of utmost importance that the integrity of the single market is respected. Any outcome should ensure that all participants are subject to the same rules.

The full speech is here.

Updated

Better than expected US home sales

A bit of US economic news, and new home sales fell less than expected in August.

The Commerce Department said sales of single family homes fell 7.6% to 609,000 compared to expectations of a decline to 600,000. July’s figure was revised up by 5,000 units to 659,000.

Here’s our US live blog of latest developments in the presidential race ahead of the Clinton-Trump debate:

Back with the US debate, and Robert Shapiro of advisory firm Sonecon has looked at the economic prospects under the two candidates:

Trump says he’ll restore 4% annual growth, or double our current rate. But his plan to achieve it is a deceit that would actually slow growth by deporting part of the labor force and ignoring everyone’s productivity. There’s no silver bullet, but Hillary’s program would help. Her path to citizenship and commitments to pay equity, child care assistance, universal health coverage, and more would expand the labor force. Furthermore, her pledges for tuition-free college, more support for R&D, and more access to loans for young businesses would all help raise productivity. It’s an easy choice.

His full post is here.

Elsewhere Mario Draghi, the head of the European Central Bank, is due to make his regular appearance before the European Parliament within the next half hour or so. He normally reads out his last governing council statement before being quizzed by MEPs, with Brexit of course high on the agenda.

The session should be available here.

Updated

Wall Street opens lower

As expected US markets are falling in early trading, ahead of the presidential debate between Hillary Clinton and Donald Trump. Investors are also jittery as oil producers meet in Algeria, with few expecting any positive decisions to curb the slump in the crude price although some are at least hoping for guidance that something may be done at Opec’s November meeting. The uncertainty over Brexit is not helping, nor is concern about Deutsche Bank after its shares fell sharply.

So the Dow Jones Industrial Average is down 105 points or 0.5%, while the S&P 500 and Nasdaq Composite opened down a similar amount.

You can get psyched up for tonight’s presidential debate by reading Dan Robert’s list of 10 awkward question for the two candidates.

Hillary Clinton should be ready for probing questions on globalisation, her counter-terrorism strategy and secrecy issues, while Donald Trump will need answers on his Middle East strategy, his suitability (or otherwise) for the most powerful job in the world, and whether he regrets anything he’s said during this most remarkable campaign.

Catch-up: Presidential debate fears and Deutsche Bank gloom

It’s been a bad morning on Europe’s stock markets, with Deutsche Bank’s problems and the looming presidential debate both hitting investor confidence.

The FTSE 100 index of leading shares in London is still down around 1.25%; banks, builders and mining stocks are all leading the selloff.

And European markets are deeper in the red:

The main European markets at noon BST
The main European markets at noon BST Photograph: Thomson Reuters

The news that Donald Trump is closing the gap with Hillary Clinton, ahead of today’s sure-to-be bruising debate has worried investors.

Trump’s comments about protectionist trade policies aren’t terribly popular in the City, while suggestions that NATO members should pay for the US’s protection have caused angst.

And the closer the race looks, the more nervous markets will get. There could still be one big shock lurking in 2016’s locker.

Peter Rosenstreich, head of market strategy at Swissquote Bank, says traders are worrying about the impact of a Trump victory.

Risk appetite has faded with many analysts pointing to the tightening of the US presidential elections and uncertainty around tonight’s debates as the primary catalysts.

Rosenstreich believes a Trump presidency could also help ‘fringe’ political groups in Europe.

Donald Trump’s track record of supporting anti-establishment issues and candidates, such as Brexit and Russian President Putin, will legitimize Eurosceptic groups. With the EU questioning its post-Brexit future and elections in France, Spain and Germany, empowered fringe parties could potentially redefine the geopolitical landscape.

Deutsche Bank’s shares are still at their lowest level since the 1980s, down 6%, despite repeatedly pledging that it hasn’t been seeking help from the Berlin government.

Chris Beauchamp of IG Index says Deutsche Bank is causing much alarm today.

The new week has started with a bang, as the parlous state of Deutsche Bank explodes onto everyone’s radar once again.

The bank has been limping along for months now, but reports that Angela Merkel may not step in to rescue the bank have sent the shares tumbling, dragging banks across the UK and Europe lower as a result. The gut feeling of most investors is that Berlin would be forced to act to avoid the loss of a key institution, but gut feelings do not always make the best trades.

Wall Street is expected to fall when it opens in around 75 minutes. Here are the pre-open calls (via CMC Markets):

  • S&P 500: 9 points lower at 2,155
  • Dow Jones: 77 points lower at 18,184
  • Nasdaq 100: 28 points lower at 4,830

Updated

Deutsche Bank interview: We're in good shape

Deutsche Bank’s head of communication, Joerg Eigendorf, has just told CNBC that the bank “strongly intends” to resolve its problems.

Eigendorf denied that CEO John Cryan had appealed, in vain, to Angela Merkel,and reiterated that Deutsche does not need to raise fresh capital (despite the threat of a $14bn fine in the US).

Here are the key points:

Q: So Mr. Cryan was allegedly in Berlin and has asked for help at the Chancellery.

JE: This is just wrong. At no moment of time. No point of time, John Cryan has asked the Chancellor for support in the negotiations with the Department of Justice and he doesn’t intend to do that. He’s very strong in that position.

Q: In Berlin, some who have been speculating about the fact that you are too big to fail. There are rumours all across the capital that Deutsche Bank is just too big. So what are you answering?

JE: Just look, I mean yes the share price is low. But that is not what is worrying us and that is not what we are really looking. What is really important to us is Our credit story which is very strong.

Its fundamentally strong and a lot of those in the market understand if they analyse the basics and the fundamentals that we are quite strong. Look at our credit story, value add risk very low, our credit portfolio very strong, liquidity position very strong, very comfortable and the third quarter is almost over.

And I can tell you today is where we are finding very comfortable.

Q: Berlin is not willing to bail you guys out. So does that put you in an insecure situation?

JE: Again that is pure speculation. And for us it’s just not a question. Deutsche Bank strongly intends to solve its problems or its challenges by itself and we don’t think about anything else. We do our homework here. We are structure of the bank.

We try to get the litigation issues out of the way because this is creating this uncertainty. A lot that is out there in the market right now. It’s just pure speculation and uncertainty that was created by this and this is what we try to do. And by doing our homework, we will get this. This uncertainty out of the market again.

Q: And looking at the markets though they are betting against you had the share price hit a new record low. How confident are you that you have enough time actually to do your homework?

JE: We are very committed and we are doing our job. We are we are out there today and doing our homework. And the speculations, again, this is as if we need something today. We are fulfilling all capital requirements comfortably right now and that is not that is just speculation for the future and we have said time and once we got through the Canadian litigation issue all of the way once we get that restructuring done, the operative strengths of the bank will be seen again and once it is seen people will then these speculations will hopefully end.

Q: Just one last question. Would you exclude the capital increase in the short to medium term now?

JE: Again this is just not a question for us right now. We fulfil the capital requirements. We have time to fulfil future capital requirements and that’s what we are working on.

Updated

Pound hit by hard Brexit talk

The pound is on track to hit a five-week low, amid speculation that the UK could be heading for a ‘hard Brexit’.

Sterling has fallen by half a cent to $1.293, which would be the lowest closing level since mid-August.

The pound vs the US dollar over the last six months
The pound vs the US dollar over the last six months Photograph: Thomson Reuters

Paresh Davdra, CEO and Co-Founder of RationalFX, blames a lack of communication about the government’s plans for Brexit.

“The recent news reports that a so called ‘hard Brexit’ seems the more likely strategy for the UK’s EU departure and this has had a dramatic impact on the pound, with sterling falling to a five week low.

Despite the lost ground, the pound had regained last week in reaction to unchanged interest rates from the Fed, but has slumped as comments from the Ministers in charge of Brexit suggest that the UK would push to become a part of the World Trade Organisation –the strongest indication yet of divorce proceedings that forgoes prolonged negotiations for single market access with the EU.

This echoes the front page of today’s Financial Times, that City figures are increasingly fearful of a Hard Brexit

John McFarlane, chairman of Barclays and TheCityUK lobby group summed up the mood to the FT:

The danger of hard talk now is that it increases uncertainty, reduces confidence and will result in businesses triggering their exit plans from the UK.

And yesterday, several business leaders including Ryanair’s Michael O’Leary criticised the government’s handling of the issue.

Bloomberg: Clinton and Trump are tied

U.S. presidential candidates Donald Trump, left, and Hillary Clinton.

Trump and Clinton are now neck-and-neck in the race for the presidency, according to a new poll from Bloomberg.

The pair are both claiming around 46% of the vote, in this latest Bloomberg Politics national poll which was conducted last week. And if two smaller parties are also included, the Republican nominee has a small leader over his Democrat rival.

This suggests Trump has gained ground on Clinton in the last week, making tonight’s debate, at Hofstra University in New York, even more dramatic.

Here’s some detail:

Among likely voters under 35 years old, Clinton gets 50 percent to Trump’s 40 percent, down from her 29-point margin in August in the two-way race and from her 26-point margin in June in the three-way race.

The poll’s margin of error is plus or minus 3.1 points for top-line numbers, with 1,002 likely voters interviewed, and is higher among subgroups. It was taken Wednesday through Saturday, after Clinton took political heat for calling half of Trump’s supporters “deplorables” and for disclosing she had pneumonia after a video caught her falling ill at a Sept. 11 ceremony.

More here:

Trump, Clinton Deadlocked in Bloomberg Poll Before Key Debate

Updated

The FT’s Bryce Elder has explained how Deutsche Bank has been a poor investment for a long time....

(this is from the always excellent daily live chat on Alphaville)

Updated

Sold and For Sale signs.

Back in the UK...the number of new mortgage approved by lenders has shrunk by 20%.

The British Bankers’ Association reports that 36,997 new home loans were approve in August, the lowest level since 2015.

Mortgage approvals can be a good leading indicator of the direction of the housing market, so this may show that the Brexit vote has cooled demand.

Here’s the full story:

The German government is trying to slap down speculation that Deutsche Bank might need state aid (following those reports that Angela Merkel has declined to help).

Steffen Seibert, Merkel’s spokesman, insists that there is no reason to speculate about this issue at all.

He told reporters that:

“There is no reason for such speculation as presented there and the federal government doesn’t engage in such speculation.”

Deutsche Bank denies seeking Merkel's help

Deutsche Bank offices in London

Deutsche Bank has insists that it can tackle its current problems without tapping shareholders for fresh capital, in response to today’s selloff.

A spokesman for the bank also denied that CEO John Cryan had asked chancellor Angela Merkel for help, to tackle the threatened $14bn fine from the DoJ.

Here’s the quote (via Reuters).

John Cryan at no point asked the German Chancellor for the government to intervene in the U.S. Justice Department’s mortgages case.

“Deutsche Bank is determined to resolve its challenges on its own.... There is currently no question of a capital increase. We are meeting all regulatory requirements.”

This is helping Deutsche Bank’s shares to recover some of their earlier losses -- when they hit a record low (according to my Reuters terminal...although other data show they were lower in the 1980s)

Turkey’s stock market is in a spin this morning, after Moody’s downgraded the country to Junk status on Friday night.

The BIST 100 index of leading shares has shed 4% this morning, with almost every company losing ground. Banking shares are leading the rout, dropping by around 6%.

The Turkish lira has been hit, and government bond prices are also weakening - driving up the yield (or interest rate) on debt issued by Ankara.

Five reasons the markets are falling

Mike van Dulken, Head of Research at Accendo Markets, says a “nasty cocktail” of worries and threats are hitting shares this morning.

They are:

  1. last week’s dovish central bank inspired rally having run its course;
  2. jitters about tonight’s Trump v Clinton debate;
  3. waning faith in this week’s Algiers Oil meeting yielding anything whatsoever;
  4. German Chancellor Merkel saying no backstop for troubled Deutsche Bank (trading all-time lows), increasing sector contagion risk;
  5. City fears of a hard Brexit.

He adds:

Risk assets like Banks, Housebuilders and Miners are bearing the brunt of it this morning. Geopolitics appears to dominate.

Updated

The financial pages of the UK newspapers are packed with Brexit stories.

In the Guardian, AkzoNobel, one of Europe’s biggest industrial companies, is calling for “quick clarity” over the UK’s future relationship with the EU.

CEO Ton Büchner says:

“As a CEO, what you prefer in situations like this is quick clarity, quick stability so everybody knows the rules, everybody can adapt to the situation on the ground.

“As long as the situation on the ground is unclear people don’t know exactly whether big decisions are going to be right or wrong, so you get postponements [of decisions]. So for us that could be with our customers and it could be with our suppliers.”

The Financial Times splash on City worries that Britain is heading for a hard Brexit, and losing access to the single market.

That could force more businesses to start relocating from London, to other EU cities, to maintain access to the bloc.

But the Telegraph is more upbeat, reporting that City economists have upgraded their growth forecasts for this year.

They say:

Panic has faded rapidly among the dozens of independent economists consulted by the Treasury as strong data in the three months since the vote reassured the analysts that any shock from the vote was far less severe than first feared.

Forecasts for 2016’s GDP growth had been chopped to 1.5pc immediately after the 23 June ballot, but economists have reversed those downgrades and now expect growth of 1.8pc - exactly the same as they predicted before the vote.

They’ve also raised next year’s forecasts, but still expect a serious slowdown:

In July the average prediction was for growth of 0.5pc in 2017, but now it almost doubled to 0.9pc – though it remains below the 2.1pc average forecast before the vote.

Updated

An early rally in the oil price has fizzled out.

Brent crude had jumped by 1% early doors, having shed over 3% on Friday. But it’s now down slightly at $45.80 per barrel.

Investors are (once again) facing the prospect that Opec fails to agree to curb production during their meeting in Algeria.

Algerian energy minister Noureddine Bouterfa raised hopes yesterday, declaring that:

“We will not come out of the meeting empty-handed.”

Updated

Around £22bn has now been wiped off the FTSE 100 this morning, with the blue-chip index currently down 88 points or 1.2%.

Updated

Bloomberg’s Matthew Campbell is also worried about Deutsche Bank:

Deutsche Bank shares hit new lows

Shares in Deutsche Bank have now hit their lowest level in over 24 years.

This morning’s selloff appears to be triggered by reports that chancellor Angela Merkel won’t provide any state assistance for the troubles lender.

Focus Magazine also reported that Merkel has declined to lobby the US Department of Justice over that $14bn fine for misconduct. That may worry investors, as Deutsche only set aside around $6bn.

Updated

German Flag.

Newsflash from Berlin: German business morale has hit its highest level in over two years.

The IFO institute says its business climate index rose to 109.5 this month, much higher than expectations of 106.4.

Ifo head Clemens Fuest says.

“Companies are clearly more optimistic about the months ahead. They are also more satisfied with their current business situation.

“The German economy is expecting a golden autumn.”

That suggests that Brexit fears have ebbed away; just in time for the US presidency to jump up the agenda...

Money is flowing out of shares and into safe-haven assets this morning.

This is driving up the value of German, US and UK government bonds, as investors hunker down ahead of the presidential debate.

Conner Campbell of SpreadEx explains:

Despite months and months of political drama one could make a fairly convincing argument for today being the real Day Zero for the US election. The first televised debate marks the point where Trump vs Clinton will be even more unavoidable than it already is, and therefore has reminded the market that the Brexit, US interest rates and China’s economic slowdown aren’t the only macro-issues out there to worry about.

In other words, the markets have been reminded this morning that a Donald Trump presidency is still more than possible, sparking a sharp decline roughly on par with the gradual gains managed last week. The FTSE dropped 80 points to duck under 6850, while the DAX and CAC fell 1.6% and 1.8% respectively.

European banking stocks are getting pummelled this morning.

Deutsche Bank is worst hit, shedding 6.6% to €10.65. It is dogged by the threat of a $14bn fine from US authorities for mis-selling mortgage-backed securities before the 2008 crash.

Lloyds Banking Group has dropped by 3%, after being downgraded to ‘sell’ by Goldman Sachs.

Wall Street bank Citi has raise the possibility of a Trump victory in November to 40%, up from 35%.

With the polls “starting to tighten”, Citi is predicting much volatility in the foreign currency markets and precious metals prices if the Republican candidate triumphs.

Citi also fears that the world economy will be hurt by the presidential race:

“Citi’s base case is for a Clinton victory and mostly continuity in policies, which would leave U.S. and global growth expectations relatively unchanged...

“But a Trump victory is a wild card and Citi expects this, among lingering uncertainties from Brexit and elsewhere, may cap the prospects for global growth to pick up in the remainder of the year.”

2016 has been a year of shocks, but could November’s presidential election be the biggest one yet?

Mike Bell of JP Morgan reckons Trump is a stronger candidate than many people believe:

Kit Juckes of Societe Generale says that the debate also sent shares down in Asia (where the Tokyo market shed 1%)

We’re starting the week in a slight risk-off mood, with Asian equities soggy, currency markets quiet, 10-year Treasury yields down a bit at 1.62% (the average of the month so far) and oil slightly higher ahead of the informal oil producers meeting.

FXTM chief market strategist Hussein Sayed says investors are wondering how to prepare for the election on November 8th.

Monday’s US presidential debate will probably break a new record, not in the S&P 500, but the number of viewers which according to media analyst could reach over 100 million Americans, surpassing Carter-Reagan debate in 1980 which attracted 80.6 million viewers. With Donald Trump closing the gap with Hillary Clinton in latest polls, the debate is becoming more interesting than any other TV show.

America’s direction, achieving prosperity and securing America are the three major topics at the first presidential debate.

Investors are becoming increasingly concerned on how to tweak their portfolios before November 8. Nasaq’s Biotech index plunged 4.5% in two days (24-25 Aug) in one tweet from Hillary Clinton criticising the recent price hikes on EpiPens, which suggest that investors and portfolio managers are seriously considering having different asset allocation strategies on the outcome of the election. However, I still believe that a Trump win will be perceived as a negative factor to the overall market.

Markets down ahead of Trump vs Clinton

European stock markets are falling in early trading, as the City’s attention turns to the looming clash between Hillary Clinton and Donald Trump.

In London, the FTSE 100 index shed 1% at the open, and is now down 80 points at 6829 (updated).

The French and German markets are showing similar losses, amid signs that the presidential debate could be particularly brutal.

European stock markets this morning
European stock markets this morning Photograph: Thomson Reuters

The presidential election is now the biggest worry in the financial markets, with investors wonder whether 2016 will end with Trump preparing to succeed Barack Obama.

The polls still put Clinton ahead, but there’s real uncertainty about the outcome.

It became clear last night that both sides are preparing for a dirty fight tonight, when the bell rings at 9pm in New York.

The Queensberry Rules don’t carry much weight when the White House is up for grabs, as my colleague David Smith explains:

Trump’s campaign manager did not rule out the prospect of the nominee getting personal onstage at Hofstra University in New York by summoning the ghosts of Bill Clinton’s sex life, insisting that the Republican candidate had “a right to defend himself”.

The two camps traded threats over who would be in the debate audience. After Clinton’s team confirmed that it had offered a front row seat to billionaire Trump critic Mark Cuban, Trump responded that he might invite Gennifer Flowers, a former model who had an extramarital encounter with Bill Clinton in the 1980s.

On Sunday, Clinton campaign chair John Podesta described Trump’s reaction as “to dive in the sewer and go for a swim”, although the Republican candidate’s running mate, Mike Pence, denied that Flowers would be present.

Bob Schieffer, a venerable broadcaster who has moderated presidential debates, commented on CBS: “Those kinds of things are beneath the dignity of the office that these two people are running for. I think they both would do well to think about that.”

Robin Bew of the Economist Intelligence Unit reckons Trump could do better than expected....

Updated

The agenda: Energy ministers meet as US presidential debate looms

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

There are three key questions in the City this morning;

  • could oil producers agree an output deal soon?
  • could Donald Trump become US president?
  • What’s happening with Brexit?

Over in Algeria, energy ministers are gathering for a two-day meeting of the International Energy Forum. That’s an opportunity for Opec members to have a behind-the-scenes chat about a potential deal to cut, or at least freeze output.

Few observers expect a breakthrough this week, but there’s the possibility of building towards an agreement at the next Opec meeting, in November.

European investors are also bracing for the first US presidential election debate, which kicks off on Monday night in the US (so 2am Tuesday in the UK).

Hillary Clinton and Donald Trump will trade blows before a massive global audience, on issues such as national security, healthcare, immigration...and each other’s ability to carry out the most powerful job in the world.

It could be a truly decisive moment in the race to the White House, as Bloomberg explains:

The first of three debates promises to be a national sensation, contrasting two vastly different New Yorkers who are recognized around the world. Clinton, known for her extensive experience in government, is more comfortable discussing substantive issues than pitching her candidacy, and Trump excels as a self-promoter and an unsparing critic of his adversaries.

Meanwhile back home, Brexit still means Brexit..... which means everyone’s still wondering what’s actually going on.

This lack of clarity is now hurting Britain’s financial services industry, as the threat of losing ‘passporting rights’ to the EU lingers.

My colleague Angela Monaghan explains:

Optimism dropped for the third consecutive quarter in the three months to September, according to the research jointly produced by the CBI business lobby group and the accountancy firm PwC.

It marked the longest run of deteriorating sentiment since the first quarter of 2009, when the global financial system was in the midst of a deep and prolonged crisis.

The biggest drop in confidence was among finance houses, building societies and investment managers, and less so among banks. Optimism was broadly stable among life and general insurance providers.

Also coming up... Mario Draghi, ECB president, is testifying at the European Parliament this afternoon (at 3pm BST).

We’ll be tracking all the main events through the day...

Updated

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