Market Update & Important Indicators:
Shares of banks slid Monday, dragging on major indexes worldwide. Investors sold bank shares in the U.S., Europe and Japan in the wake of recent central bank meetings that suggested easy money policies were likely to continue, with low interest rates typically hitting profits at financial firms. Financial shares were among the biggest decliners in the S&P 500. Some traders and investors said reports of capital issues at Deutsche Bank were adding to concerns about the sector. Deutsche Bank fell 7.5% to the lowest price in at least 20 years, according to FactSet. Several investors also said they were watching tonight's U.S. presidential debate for signs that a tightening race might break toward one candidate or the other and indications of how that might affect financial markets. A new Wall Street Journal/NBC News poll found that 34% of registered voters expect the three presidential debates to be important in helping them decide how to vote. While stock markets have risen steadily over the summer, some investors expect the election, along with the price of oil, to trigger increased volatility in stock markets in October and November.
Declines in bank stocks helped push the Stoxx Europe 600 down 1.6%, following losses in Asia. Some traders and investors said reports of capital issues at Deutsche Bank were adding to concerns about the sector. The German lender's shares have been hit recently by fears it may need a capital increase, after The Wall Street Journal reported this month that the U.S. Justice Department proposed that Deutsche Bank pay $14 billion to settle a set of high-profile mortgage-securities probes.
Asian shares were broadly lower Monday, as traders largely gave up hope for an oil breakthrough this week and as the Bank of Japan flagged that it remained committed to negative rates. Japan's Nikkei Stock Average finished the day off 1.3%, while Hong Kong's Hang Seng Index retreated 1.6% and South Korea's Kospi slipped 0.3%. Analysts have low expectations for any breakthroughs in oil production cuts when the Organization of the Petroleum Exporting Countries gathers for an informal meeting in Algiers this week. OPEC has already failed at several attempts to impose some sort of production cap over the past year. Elsewhere, a speech by Bank of Japan Governor Haruhiko Kuroda on Monday weighed heavily on Tokyo banking and life insurance stocks. Mr. Kuroda's words strengthened concerns that the BOJ was prepared to take short-term interest rates deeper into negative territory, despite the implications for bank profits.
Australian shares clung to a more-than-three-week high Monday, finishing steady following four straight sessions of gains. After rallying last week on central-bank policy decisions in the U.S. and Japan, Australia's stock market paused at the start of the new week with little domestic news to focus on and some uncertainty ahead of the first U.S. presidential debate between Hillary Clinton and Donald Trump later in the global day. The S&P/ASX 200 edged up 0.1 point to 5431.4 – the highest closing level since Aug. 31. A positive day for sectors including materials, property trusts and information technology was balanced by weakness among energy, financial and consumer staples stocks.
The London Metal Exchange's three-month copper contract closed down 0.3% at $4,841/t. Aluminium closed up 1.1% at $1,648/t, zinc closed up 0.6% at $2,280/t, tin closed up 0.6% at $19,805/t, and lead closed up 1.5% at $1,937/t. Nickel closed down 1.2% at $10,485/t
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