Market Report: Deutsche Bank hits record low on balance sheet fears

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The stock market sell-off of banks accelerated over mounting concerns about the strength of their balance sheets as huge fines keep rolling in.

The shockwaves were strongest in Germany, where Deutsche Bank, which is facing a potential $14 billion (£11 billion) US fine, slumped 6.5%, to a record low of €10.67 (927p).

Reports suggested German Chancellor Angela Merkel would not be willing to bail out Deutsche.

London-listed lenders also took a beating. Barclays dived 4.35p, or 2.5%, to 167.05p, Royal Bank of Scotland tumbled 3.2p to 179.4p, and Asia-focused Standard Chartered slipped 12.5p to 626.6p.

Goldman Sachs compounded the sector’s misery with a wave of downgrades that pushed stocks lower.

Increasing competition in mortgages for Lloyds Banking Group from HSBC will “have a significant impact on profitability”, Goldman warned, as it slashed its rating to Sell, causing the shares to fall 1.86p or 3.3% to 54.12p.

Not even the challenger banks were immune to the sell-off. Metro Bank, another to suffer a Sell downgrade from Goldman, retreated 78p or 2.8% to 2707p.

The banks’ slide took its toll on the FTSE 100, which fell 78.16 points or 1.1% to 6831.27, as investors counted a handful of reasons not to buy equities, including the presidential elections. The first televised debate between Hillary Clinton and Donald Trump hits screens tonight and is likely to move markets tomorrow.

Investors checked out of hotels giant InterContinental, which fell 140p to 3145p as Morgan Stanley cut to Underweight, warning about the industry downturn in the US.

Covent Garden landlord Capital & Counties was 3p lower at 285.6p after a £175 million private placing of debt with five US investors to bolster the balance sheet.


In reverse: The AA (YouTube/AA)

Traders are expecting a grim set of first-half results on Wednesday from the AA, which reversed 7.25p to 296.65p.

Financial data firm Markit said hedge funds have been racking up bets against the roadside assistance firm, increasing their short positions by 50% over the past month — the biggest jump of any company in the run-up to results. 

Chelsea owner Roman Abramovich welcomed a £5 million payout as his FTSE 250 gold miner Highland Gold, up 3.2p at 139.3p, paid out a 5p interim dividend.

The rally from AIM-listed Gemfields continued as it revealed annual pre-tax profits jumped from $26.3 million to $41.8 million. Shares in the coloured gemstone miner and jeweller, which counts Hollywood actress Mila Kunis as a brand ambassador, rose 1p to 46p.

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September 26, 2016 |
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