Spreadex Market Update
DAX leads Europe lower with Deutsche Bank + Deutsche Lufthansa seeing sharp declines
With investors processing not only Yellen’s dovish, cautionary comments, but negative statements from the Swiss and Norwegian central banks, the European markets saw a dramatic shift in sentiment this Thursday, a shift led by the DAX. A host of sharp declines, from Commerzbank and Deutsche Bank (following the latter’s CEO John Cryan warning yesterday that the bank wouldn’t be profitable in 2016), to Deutsche Lufthansa (which cut its profit forecasts this morning due to increased cut-price competition), to VW and Daimler (the auto-sector still precarious following last year’s emissions scandal), as well as the general impact of a stronger post-Fed euro, saw the DAX hammered by multiple directions this Thursday, causing the index at points to fall by nearly 200 points.
The losses from the German index were significant enough to impact its European peers, the CAC seeing its own 1.7% plunge and the FTSE falling around 0.6%, both caught out by heavy losses in their banking stocks, Deutsche Bank’s probability warning sending ripples through the sector. The FTSE likely would have been lower if it wasn’t for the $41(ish) per barrel performance from Brent Crude, a green commodity sector preventing the UK index from posting the kind of losses seen in the Eurozone. The pound, meanwhile, continued to benefit from last night’s dovish dispatch from the Fed, cable rising to $1.435, but with the Bank of England rate vote still to come.
After hitting highs not seen since the start of the year following Wednesday’s FOMC statement, the Dow is set to join its European cousins in the doghouse this Thursday, the futures pointing to a 70 point drop at the open. There is a decent chunk of data for the US markets to process this afternoon, including the Philly Fed manufacturing index, the usual Thursday jobless claims, the latest current account figure and the JOLTS job openings number.
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