Friday’s hefty claim against Deutsche was higher than the German bank expected and has raised questions about whether RBS should set aside more cash.
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Shares in Deutsche Bank have plummeted more than 8% after the US Department of Justice (DoJ) proposed it should pay a 14 billion US dollar (£10.5 billion) settlement linked to the sale of mortgage-backed securities in the run-up to the financial crisis. Investors continue to remain on edge regarding the possibility of the Federal Reserve raising interest rates at its meeting next week.
The STOXX Europe 600 index fell 0.7 percent to 337.8 points, its lowest closing level since August 4. The Standard & Poor’s 500 index lost 6 points, or 0.3 percent, to 2,141 and the Nasdaq composite lost 2 points, or 0.1 percent, to 5,246.
A recent European Union ruling that Apple must pay up to 13 billion euros in taxes to the Irish government and the forthcoming USA election could complicate Deutsche Bank’s efforts to whittle down the demand. Some analysts believe the Bank of Japan may increase asset purchases up to 100 trillion yen a year from the current 80 trillion yen a year, or take its negative policy rate to minus 0.3 percent from minus 0.1 percent.
Deutsche Bank is among several major financial institutions accused by United States authorities of misleading investors about the values and quality of complex mortgage-backed securities sold before the 2008 financial crisis.
Volatility returned to the financial markets this week, as investors took turns buying and selling stocks.
TERMINALLY ILL: Pharmaceutical company Novavax plunged $6.86, or 83 per cent, to $1.49 after the company said its experimental vaccine failed in late-stage clinical testing.
NEW NEIGHBORS: The S&P 500 is adding a new industry to its traditional groups for the first time since the dotcom era. The benchmark stock index will now have a real estate sector, which will be split off from the financial services component of the S&P 500.
Business software maker Oracle dropped 3 percent after its earnings and revenue fell short of analysts’ forecasts. Shares of Germany’s biggest bank were down 7.1 percent at 12.87 euros ($13.59) in Frankfurt trading. Deutsche Bank AG has a 52 week low of €11.07 and a 52 week high of €27.95.
Energy shares fell as crude oil prices slid by up to 2 percent to multi-week lows after swelling Iranian exports reinforced fears of a global glut.
OIL PRICES: Benchmark U.S. crude lost 67 cents to $43.22 per barrel in NY.
CURRENCIES: The euro slipped 0.1 percent to $1.1227 while the dollar was off 0.3 percent against the yen at 101.97 yen.
Bond prices rose. The yield on the 10-year Treasury note fell to 1.68 percent.
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The December gold contract was down US$7.80 to US$1,310.20 per ounce and the December copper contract was relatively unchanged at US$2.16.
