Spreadex Market Update
Deutsche Bank drags DAX into the red with investor-displeasing job cuts
After striving to post some mild gains after the bell the DAX was forced into the red by Deutsche Bank this morning, dropping by around 30 points. Initially investors had coped with the confirmation of Deutsche Bank’s previously announced €6 billion third quarter loss fairly well, and even managed to swallow the suspension of its dividend for 2 years. However, the revelation that the bank would be cutting 9000 full-time jobs, 4000 of which in Germany, alongside closing its operations in Argentina, Chile, Mexico, Uruguay, Peru, Denmark, Finland, Norway, Malta and New Zealand was a step too far, sending the stock over 5.5% lower after the restructuring plan was laid out.
With its commodity and banking sectors both displaying a violent shade of red, exacerbated by the disastrous mornings for Shell and Barclays respectively, the FTSE stood little chance of shrinking its 60-70 point loss this Thursday, becoming the worst performing Western index in the process.
Things are unlikely to improvement this afternoon, at least if the US futures are anything to go by. Whilst the Fed chose to leave interest rates unchanged (as forecast by everyone bar the most squawking of hawks) yesterday evening, the central bank was far less cautious in its statement than people had expected, explicitly putting a December lift-off in play by referencing possible action at the ‘next meeting’. Renewed fears over an impending hike, something that many had seen as shunted until next March, has left the Dow looking at a 50 point drop at the open, an open that will likely be dictated by this afternoon’s advance GDP figure. Analysts are expecting 1.6% growth for the third quarter at the annualised rate compared to the 3.9% seen in Q2, but with room for a positive surprise given the smaller goods trade deficit announced yesterday.
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