MW European stocks tumble as oil, Deutsche Bank shares slump
European stocks slid Monday, with a selloff in oil and gas shares and in German lender Deutsche Bank AG pushing the market’s benchmark toward its biggest daily loss in almost three months.
The Stoxx Europe 600 SXXP, -1.37% dropped 1.4% to 340.63, in line for its largest percentage decline since early July, according to FactSet data. All sectors were lower, led by the financial SXFR, -1.57% oil and gas, and consumer services groups.
Regional indexes suffered, with Germany’s DAX 30 DAX, -1.64% down 1.6% to 10,460.62 and Spain’s IBEX 30 IBEX, -1.18% losing 1.2% to 8,719.00. Read:Spain’s regional elections a boost for acting Prime Minister Mariano Rajoy
In Frankfurt, Deutsche Bank DBK, -5.41% DB, -5.65% shares sank 6% to an all-time low of €10.63 after Germany’s Focus magazine reported over the weekend that German Chancellor Angela Merkel wouldn't support providing state aid for the country’s largest lender. The German government dismissed the report on Monday.
“Financial markets have started the new trading week in a cautious mood with the prospect of the first [U.S.] presidential debate and key developments in the oil market set to drive sentiment,” said Richard Perry, market analyst at Hantec Markets, in a note.
Read: Clinton-Trump debate showdown carries potential to sock stocks
Both members in and outside of the Organization of the Petroleum Exporting Countries are meeting this week in Algiers at the International Energy Forum. Investors will watch for any news that oil-producing countries will agree to curb oil output as the market deals with a long-running oil glut.
Investors have been questioning whether producers could actually work out a deal, leading to pull-and-pull action in oil prices CLX6, +1.39% LCOX6, +1.59% recently.
Among European energy production companies, France’s Total SA FP, -1.49% TOT, -2.23% fell 1.6%, Portugal’s Galp Energia SGPS GALP, -1.31% lost 1.4% as did Spain’s Repsol SA REP, -1.38% REP, -1.50% In the oil-field-services and equipment group, Italy’s Saipem SpA SPM, -4.30% gave up 4.2%.
The Stoxx Europe 600 Oil Index SXEP, -1.45% slumped 1.5%.
On Friday, Stoxx 600 fell by 0.7%, but still scored a weekly advance of 2.2%, the largest since mid-July.
Deutsche pushes back: Deutsche Bank’s head of communications Joerg Eigendorf told CNBC on Monday that Chief Executive John Cryan “at no moment of time” has asked Merkel for support in its negotiations with the U.S. The Justice Department this month proposed that the bank pay $14 billion to settle civil claims related to mortgage-backed securities.
While the company’s share price may be low, that’s not the bank’s focus, he said. What’s “really important to us is our credit story, which is very strong. It’s fundamentally strong.”
Movers: Specialty chemical company Lanxess AG LXS, +8.39% jumped 8% after saying Sunday it’s buying Chemtura Corp. CHMT, +2.29% in a deal with an enterprise value of around 2.4 billion euros ($2.7 billion).
Lloyds Banking Group PLC LLOY, -3.18% LYG, -2.64% shares dropped 3.5% following a ratings downgrade to sell from neutral at Goldman Sachs.
Data: The Ifo German business sentiment index rose in September, hitting its highest level since May 2014.
The euro EURUSD, +0.3474% extended gains after the report, buying $1.1264, up from $1.1224 late Friday.
Indexes: France’s CAC 40 PX1, -1.59% fell 1.6% to 4,416.59 and Italy’s FTSE MIB I945, -1.68% declined 1.7% to 16,181.24. The U.K’s FTSE 100 UKX, -1.05% fell 1.1% to 6,836.59.
U.S. debate: Turning back to politics, the first U.S. presidential debate between Democratic Party nominee Hillary Clinton and Republican Party nominee Donald Trump will begin at 9 p.m. Eastern Time, or 2 a.m. London time Tuesday morning.
“With the September FOMC meeting out of the way traders will turn focus towards who will be the next [U.S.] president. With the candidates seemingly running on equal footing in the polls, the live debates could be the swing factor as to whether Trump or Clinton claim the White House,” said Hantec Market’s Perry.
“So these debates will be volatility factors for traders and the first is in New York tonight.”
