Global Stocks Slide Back After Fed-inspired Rally

Global stocks slide back after Fed-inspired rally

LONDON, (APP - UrduPoint / Pakistan Point News -26th Sep,2016) - World stock markets slumped Monday as enthusiasm over a US Federal Reserve-inspired rally faded, while a crash in Deutsche Bank's shares offset a surge in German business confidence.

Traders took profits after rallies last week sparked by the US central bank's decision to freeze interest rates a while longer before ending the week in the red. "It's been a rough start to the week," said ADS Securities London analyst Paul Webb.

He noted however that "significantly better-than-expected business sentiment data out of Germany" had lifted the euro. In midafternoon trading London's benchmark FTSE 100 index was down 1.3 percent compared with the close on Friday.

In the eurozone, Frankfurt's DAX 30 and the Paris CAC 40 both lost 1.8 percent. Shares on Wall Street followed suit, down 0.8 percent shortly after opening. The euro jumped to $1.1253. A strong Yen meanwhile knocked the stuffing out of Tokyo's main Nikkei stocks index, which ended down 1.25 percent.

Hong Kong's Hang Seng index retreated 1.6 percent. In Europe, German business confidence soared to its highest level in more than two years in September, the Ifo economic institute said, recovering from a post-Brexit slump and signalling a rosier outlook for Europe's largest economy.

The closely-watched index unexpectedly jumped to 109.5 points from 106.3 points in August to reach its highest reading since May 2014, the Munich-based Ifo said. "The German economy is expecting a golden autumn," Ifo president Clemens Fuest said in a statement.

Berenberg bank economist Florian Hense said the "better sentiment across all sectors bodes well for the outlook for the rest of the year. "It seems that concerns are easing over the consequences of the UK's decision to leave the EU and the economic outlook," he said adding however sentiment would depend on events such as the US presidential election.

But shares in Deutsche Bank plunged 6.0 percent to 10.67 Euros. "Weekend reports that German Chancellor Angela Merkel had ruled out the prospect of any form of state aid in the event that Deutsche Bank's problems become more acute have hit the share price hard," said Michael Hewson, chief market analyst at CMC Markets UK.

US authorities are targeting Deutsche Bank for a record $14-billion fine (12.5 billion euros), marking the latest blow for a company which since the 2008 financial crisis has run a gauntlet of setbacks.

"While the eventual fine may not be anywhere near that much, the litany of legal problems has raised concerns about the health of one of Europe's largest lenders and any contagion effect to the rest of Europe's sickly banking sector," Hewson added in a client note.

Oil prices rose modestly ahead of a meeting of producers from the Organization of the Petroleum Exporting Countries cartel in Algeria this week that could agree to cap supplies. Analysts have warned however that optimism should be tempered by a stubborn supply glut and disagreement among OPEC members.

- Key figures around 1340 GMT - =============================== London - FTSE 100: DOWN 1.3 percent at 6,823.36 points Frankfurt - DAX 30: DOWN 1.8 percent at 10,435.25 Paris - CAC 40: DOWN 1.8 percent at 4,406.95 EURO STOXX 50: DOWN 1.6 percent at 2,982.71 New York - DOW: DOWN 0.8 percent at 18,114.93 Tokyo - Nikkei 225: DOWN 1.3 percent at 16,544.56 (close) Hong Kong - Hang Seng: DOWN 1.6 percent at 23,317.92 (close) Shanghai - Composite: DOWN 1.8 percent at 2,980.43 (close) Euro/dollar: UP at $1.1253 from $1.1228 late Friday Dollar/yen: DOWN at 100.41 yen from 101.02 yen Pound/dollar: DOWN at $1.2949 from $1.2972