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Market turmoil: FTSE 100 hits three-year low as rout continues - business live Market turmoil: FTSE 100 hits three-year low as rout continues - business live
(35 minutes later)
2.11pm GMT
14:11
Make that 5%.....
As we flagged up this morning, Deutsche Bank is one of several banks who is now trading significantly below its book value -- what its portfolio of assets, liabilities, capital reserves, etc is actually worth.
1.53pm GMT
13:53
Deutsche Bank’s shares have now lost another 3.5%, hitting €13.30.
That’s just below the lowpoint set in early 2009, after Lehman Brothers failed, and is the lowest since at least 1992 (my data doesn’t go back any further).
Deutsche Bank just dropped below its 2009 low pic.twitter.com/RCiHa89Qb7
1.43pm GMT
13:43
Wall Street is still expected to open in the red, at 9.30am New York time (2.30pm GMT).
According to IG, the Dow will shed around 150 points at the open, a drop of 0.9%.
They also predict that the VIX “fear” index, which tracks volatility, will jump by over 4%. That shows rising nervousness, although not a full-blown panic.
Our US opening calls:#DOW 15886 -0.86%#SPX 1837.5 -0.84%#NDX 3923 -0.97%#VIX 26.6 +4.65%
1.30pm GMT1.30pm GMT
13:3013:30
European stocks are now languishing at their lowest level since September 2013, as the market rout continues to ripple across trading floors.European stocks are now languishing at their lowest level since September 2013, as the market rout continues to ripple across trading floors.
The benchmark FTSeurofirst 100 index has lost 1.9% today, driven down by banking shares.The benchmark FTSeurofirst 100 index has lost 1.9% today, driven down by banking shares.
The European banking index is down 3.4%, hit by fears over Italy’s financial sector, and by Deutsche Bank (now down 3% since that ‘rock solid’ memo).The European banking index is down 3.4%, hit by fears over Italy’s financial sector, and by Deutsche Bank (now down 3% since that ‘rock solid’ memo).
The selloff puts more pressure on the European Central Bank to announce new stimulus measures next month, as Reuters explains:The selloff puts more pressure on the European Central Bank to announce new stimulus measures next month, as Reuters explains:
The banking index was set for its biggest weekly losing streak since 1998 as investors fret over the threat to banks’ profitability and capital strength from compressed interest rate margins.The banking index was set for its biggest weekly losing streak since 1998 as investors fret over the threat to banks’ profitability and capital strength from compressed interest rate margins.
“The mood is clearly negative. What is needed is a strong and clear message from the ECB,” said Activtrades chief market analyst Carlo Alberto De Casa.“The mood is clearly negative. What is needed is a strong and clear message from the ECB,” said Activtrades chief market analyst Carlo Alberto De Casa.
1.01pm GMT1.01pm GMT
13:0113:01
FTSE 100 index hits lowest level since November 2012FTSE 100 index hits lowest level since November 2012
Shares in London are falling at a faster pace now, dragging the FTSE 100 down to its lowest intraday level since late 2012.Shares in London are falling at a faster pace now, dragging the FTSE 100 down to its lowest intraday level since late 2012.
The blue-chip index has shed 76 points now, as jitters over the global economy rear up again.The blue-chip index has shed 76 points now, as jitters over the global economy rear up again.
The FTSE is now down at 5,613 points, a drop of 1.3% today, smashing through the previous three-year low set last month (when London slumped into a Bear Market amid a wave of panic selling).The FTSE is now down at 5,613 points, a drop of 1.3% today, smashing through the previous three-year low set last month (when London slumped into a Bear Market amid a wave of panic selling).
The London market is being dragged down by mining shares, reflecting concerns about economic prospects:The London market is being dragged down by mining shares, reflecting concerns about economic prospects:
The biggest faller is Antofagasta, a major copper producer, followed by Anglo American - whose interests include iron ore, nickel, and coal. Their shares have been under pressure for months, as emerging market problems have hit demand for commodities.The biggest faller is Antofagasta, a major copper producer, followed by Anglo American - whose interests include iron ore, nickel, and coal. Their shares have been under pressure for months, as emerging market problems have hit demand for commodities.
Deutsche Bank’s claim that it is “rock-solid” doesn’t appear to have stabilised the markets.Deutsche Bank’s claim that it is “rock-solid” doesn’t appear to have stabilised the markets.
And the prospect of losses on Wall Street today is adding to the nervous feeling in the City, as traders reach for their metaphorical tin hats.And the prospect of losses on Wall Street today is adding to the nervous feeling in the City, as traders reach for their metaphorical tin hats.
UpdatedUpdated
at 1.11pm GMTat 1.11pm GMT
12.49pm GMT12.49pm GMT
12:4912:49
Wall Street is expected to suffer fresh losses when trading begins in under two hours time.Wall Street is expected to suffer fresh losses when trading begins in under two hours time.
The futures market is predicting that the Dow will drop by 121 points, or 0.75%, with similar falls on the Nasdaq and S&P 500.The futures market is predicting that the Dow will drop by 121 points, or 0.75%, with similar falls on the Nasdaq and S&P 500.
FXTM Research Analyst Lukman Otunuga says investors have no appetitive for risk assets right now, given fears over a global recession.FXTM Research Analyst Lukman Otunuga says investors have no appetitive for risk assets right now, given fears over a global recession.
It must be understood that confidence towards the global economy remains strikingly low, while the bitter decline in oil prices has soured risk appetite consequently obstructing any solid recovery in the stock markets.It must be understood that confidence towards the global economy remains strikingly low, while the bitter decline in oil prices has soured risk appetite consequently obstructing any solid recovery in the stock markets.
UpdatedUpdated
at 1.33pm GMTat 1.33pm GMT
12.47pm GMT12.47pm GMT
12:4712:47
I’m not sure Deutsche Bank should really be speculating about whether the market selloff has gone too far....I’m not sure Deutsche Bank should really be speculating about whether the market selloff has gone too far....
#DAX dropped below 9,000 points yesterday - worst start to a year ever: are the markets overreacting? #DrStephan#DAX dropped below 9,000 points yesterday - worst start to a year ever: are the markets overreacting? #DrStephan
12.28pm GMT12.28pm GMT
12:2812:28
Deutsche CEO: We're rock-solidDeutsche CEO: We're rock-solid
Deutsche Bank’s chief executive has issued an open letter to staff, in an attempt to calm fears over the company.Deutsche Bank’s chief executive has issued an open letter to staff, in an attempt to calm fears over the company.
John Cryan, who took over last year, told employees that Deutsche is “absolutely rock solid”.John Cryan, who took over last year, told employees that Deutsche is “absolutely rock solid”.
Last week, at one of our scheduled off-sites, the Management Board talked about progress on our strategy, and how recent market volatility and forecasts for slowing economic growth might impact our clients and us. Volatility in the fourth quarter impacted the earnings of most major banks, especially those in Europe, and clients may ask you about how the market-wide volatility is impacting Deutsche Bank.Last week, at one of our scheduled off-sites, the Management Board talked about progress on our strategy, and how recent market volatility and forecasts for slowing economic growth might impact our clients and us. Volatility in the fourth quarter impacted the earnings of most major banks, especially those in Europe, and clients may ask you about how the market-wide volatility is impacting Deutsche Bank.
You can tell them that Deutsche Bank remains absolutely rock-solid, given our strong capital and risk position. On Monday, we took advantage of this strength to reassure the market of our capacity and commitment to pay coupons to investors who hold our Additional Tier 1 capital. This type of instrument has been the subject of recent market concern.You can tell them that Deutsche Bank remains absolutely rock-solid, given our strong capital and risk position. On Monday, we took advantage of this strength to reassure the market of our capacity and commitment to pay coupons to investors who hold our Additional Tier 1 capital. This type of instrument has been the subject of recent market concern.
The market also expressed some concern about the adequacy of our legal provisions but I don’t share that concern. We will almost certainly have to add to our legal provisions this year but this is already accounted for in our financial plan.The market also expressed some concern about the adequacy of our legal provisions but I don’t share that concern. We will almost certainly have to add to our legal provisions this year but this is already accounted for in our financial plan.
Cryan also explains how he wants to turn Deutsche into “a trusted and successful bank”.Cryan also explains how he wants to turn Deutsche into “a trusted and successful bank”.
It has been involved in several scandals in recent years, and was fined for doing business with US-sanctioned countries like Iran and Syria.It has been involved in several scandals in recent years, and was fined for doing business with US-sanctioned countries like Iran and Syria.
The letter is online here.The letter is online here.
Cryan is obviously keen to douse concerns that Deutsche is struggling, after it reported a €6bn loss last October.Cryan is obviously keen to douse concerns that Deutsche is struggling, after it reported a €6bn loss last October.
Shares in Deutsche Bank are falling, though. After a solid start, they’re now down 1%, adding to yesterday’s 9% tumble.Shares in Deutsche Bank are falling, though. After a solid start, they’re now down 1%, adding to yesterday’s 9% tumble.
12.16pm GMT12.16pm GMT
12:1612:16
Mining companies are leading the selloff in London:Mining companies are leading the selloff in London:
Looks like the rally is over for now. The miners are getting smashed again pic.twitter.com/IHRwyLGXR6Looks like the rally is over for now. The miners are getting smashed again pic.twitter.com/IHRwyLGXR6
12.15pm GMT12.15pm GMT
12:1512:15
Heads-up, UK readers. The Economist Intelligence Unit has predicted that British interest rates will stay on hold until 2020!Heads-up, UK readers. The Economist Intelligence Unit has predicted that British interest rates will stay on hold until 2020!
The EIU argues that the UK recovery is much more vulnerable than previously thought.The EIU argues that the UK recovery is much more vulnerable than previously thought.
US economy will experience a downturn in 2019, they predict, while rising levels of indebtedness in China will pose another challenge.US economy will experience a downturn in 2019, they predict, while rising levels of indebtedness in China will pose another challenge.
And that means:And that means:
We no longer expect tightening to begin in the final quarter of this year. We now expect the Bank of England to hold off on tightening for the next four years at least.We no longer expect tightening to begin in the final quarter of this year. We now expect the Bank of England to hold off on tightening for the next four years at least.
That’s a pretty dovish forecast. Many economists reckon the first rate hike will come in 2017 or 2018.That’s a pretty dovish forecast. Many economists reckon the first rate hike will come in 2017 or 2018.
12.09pm GMT12.09pm GMT
12:0912:09
European markets hit fresh 16-month lowsEuropean markets hit fresh 16-month lows
European markets are falling deeper into the red, as lunchtime approaches.European markets are falling deeper into the red, as lunchtime approaches.
The Stoxx 600 index, which tracks the 600 largest companies across Europe, has dropped by 0.7% to a new 16-month low.The Stoxx 600 index, which tracks the 600 largest companies across Europe, has dropped by 0.7% to a new 16-month low.
Italy’s FTSE MIB has lost another 1.7%, the French CAC is down 1% and the German Dax has lost 0.6%, despite the forced-looking air of jollity among the fancy-dressed traders.Italy’s FTSE MIB has lost another 1.7%, the French CAC is down 1% and the German Dax has lost 0.6%, despite the forced-looking air of jollity among the fancy-dressed traders.
In London, the Footsie 100 is down 31 points or 0.5%, as traders continue to be depressed by the slump in Japan overnight.In London, the Footsie 100 is down 31 points or 0.5%, as traders continue to be depressed by the slump in Japan overnight.
11.48am GMT11.48am GMT
11:4811:48
Achilles Macris has just issued a response to the FCA’s decision to fine him £792,000 today for not being open over the London Whale case.Achilles Macris has just issued a response to the FCA’s decision to fine him £792,000 today for not being open over the London Whale case.
Macris claims it’s a “major climbdown” by the regulator, because the FCA has belatedly accepted that he never intentionally misled them.Macris claims it’s a “major climbdown” by the regulator, because the FCA has belatedly accepted that he never intentionally misled them.
He declares:He declares:
The Final Notice issued to JP Morgan by the FCA in 2013 wrongly and unfairly accused me of deliberately misleading the FSA. That Notice was released to the public without the FCA ever having properly heard my side of the story. Today the FCA has finally accepted that this allegation against me was utterly wrong.The Final Notice issued to JP Morgan by the FCA in 2013 wrongly and unfairly accused me of deliberately misleading the FSA. That Notice was released to the public without the FCA ever having properly heard my side of the story. Today the FCA has finally accepted that this allegation against me was utterly wrong.
Today’s result also vindicates my actions in bringing my third party reference seeking to have this allegation removed from the JP Morgan Notice. The FCA demonstrated a total disregard for my rights as an individual in its haste to issue the JP Morgan Notice and impose a large fine on the firm.Today’s result also vindicates my actions in bringing my third party reference seeking to have this allegation removed from the JP Morgan Notice. The FCA demonstrated a total disregard for my rights as an individual in its haste to issue the JP Morgan Notice and impose a large fine on the firm.
Macris is also taking his case to the Supreme Court, and wants the FCA to expunge that original Notice.Macris is also taking his case to the Supreme Court, and wants the FCA to expunge that original Notice.
The FCA has had several opportunities to admit its mistakes, but instead, at every turn, it has until now sought to defend and justify its position, wasting public funds.The FCA has had several opportunities to admit its mistakes, but instead, at every turn, it has until now sought to defend and justify its position, wasting public funds.
UpdatedUpdated
at 11.52am GMTat 11.52am GMT
11.36am GMT11.36am GMT
11:3611:36
Yikes. The yield (interest rate) on Greek 10-year bonds has hit its highest level since last August.Yikes. The yield (interest rate) on Greek 10-year bonds has hit its highest level since last August.
Greek 10-year pic.twitter.com/m08KfhrfPTGreek 10-year pic.twitter.com/m08KfhrfPT
Some investors are losing faith in Greece’s ability to implement its third bailout and get debt relief.Some investors are losing faith in Greece’s ability to implement its third bailout and get debt relief.
Talks with its creditors over pensions reforms are bogged down, farmers are blockading roads to demonstrate against austerity, and exporters are suffering from the capital controls imposed last summer.Talks with its creditors over pensions reforms are bogged down, farmers are blockading roads to demonstrate against austerity, and exporters are suffering from the capital controls imposed last summer.
11.29am GMT11.29am GMT
11:2911:29
Although European markets are rather calmer than yesterday, there’s an awful lot of jitteriness around.Although European markets are rather calmer than yesterday, there’s an awful lot of jitteriness around.
Ironically, the Asian Lunar New Year appears to have actually made things worse, rather than just remove the volatile Chinese indices from the mix.Ironically, the Asian Lunar New Year appears to have actually made things worse, rather than just remove the volatile Chinese indices from the mix.
Kit Juckes, experienced currency strategist at French Bank Société Générale, explains:Kit Juckes, experienced currency strategist at French Bank Société Générale, explains:
The absence of many Asian market participants just adds to woeful liquidity conditions, while concerns about commodities, Chinese currency policy and global slowdown haven’t gone away at all.The absence of many Asian market participants just adds to woeful liquidity conditions, while concerns about commodities, Chinese currency policy and global slowdown haven’t gone away at all.
Add to that sharp widening in subordinated European bank spreads and we have the makings of a very nervous market.Add to that sharp widening in subordinated European bank spreads and we have the makings of a very nervous market.
11.21am GMT11.21am GMT
11:2111:21
Wondering whether to be fearful or cheerful today? Our video runs though the reasons to panic, or be optimisticWondering whether to be fearful or cheerful today? Our video runs though the reasons to panic, or be optimistic
11.12am GMT11.12am GMT
11:1211:12
Former JP Morgan banker fined over London WhaleFormer JP Morgan banker fined over London Whale
The banking sector likes to argue that it has mended its ways since the financial crisis struck. Critics aren’t convinced.The banking sector likes to argue that it has mended its ways since the financial crisis struck. Critics aren’t convinced.
So it’s worth noting that Britain’s City watchdog has just slapped a £792,900 fine on a former senior JP Morgan banker, over one of the biggest scandals of recent years.So it’s worth noting that Britain’s City watchdog has just slapped a £792,900 fine on a former senior JP Morgan banker, over one of the biggest scandals of recent years.
Achilles Macris, the ex head of CIO International for JPMorgan Chase Bank, has been sanctioned for failing to be “open and co-operative” with regulators over the “London Whale trades” which ultimately cost them £13bn.Achilles Macris, the ex head of CIO International for JPMorgan Chase Bank, has been sanctioned for failing to be “open and co-operative” with regulators over the “London Whale trades” which ultimately cost them £13bn.
"FCA fines former Head of JP Morgan’s CIO International £792,900 for failing to be open and co-operative."Sharing is caring."FCA fines former Head of JP Morgan’s CIO International £792,900 for failing to be open and co-operative."Sharing is caring.
The London Whale was Bruno Iksil – whose bullish and complicated trades turned sour in 2012. Despite the potential risks, Macris didn’t tell the Financial Conduct Authority the full extent of the problems, they say.The London Whale was Bruno Iksil – whose bullish and complicated trades turned sour in 2012. Despite the potential risks, Macris didn’t tell the Financial Conduct Authority the full extent of the problems, they say.
This made it harder for the FCA to judge the situation, and also made it harder for more junior staff to be open and cooperative.This made it harder for the FCA to judge the situation, and also made it harder for more junior staff to be open and cooperative.
Mark Steward, director of enforcement and market oversight at the FCA, says:Mark Steward, director of enforcement and market oversight at the FCA, says:
‘A failure to communicate openly with us can affect the well-running of markets and cause unnecessary harm to investors, especially in times of financial stress or crisis.‘A failure to communicate openly with us can affect the well-running of markets and cause unnecessary harm to investors, especially in times of financial stress or crisis.
Regulators need open communication with firms so that better decisions can be made sooner. Mr Macris should have explained the position more squarely especially when he knew the Synthetic Credit Portfolio’s losses had worsened.’Regulators need open communication with firms so that better decisions can be made sooner. Mr Macris should have explained the position more squarely especially when he knew the Synthetic Credit Portfolio’s losses had worsened.’
What a shame that the review in to Britain’s banking culture has been shelved....What a shame that the review in to Britain’s banking culture has been shelved....
UpdatedUpdated
at 11.39am GMTat 11.39am GMT
10.47am GMT10.47am GMT
10:4710:47
Here’s a reminder of the most astonishing development of the day (so far) -- investors are now paying for the privilege to lend to the Japanese government for the next decade:Here’s a reminder of the most astonishing development of the day (so far) -- investors are now paying for the privilege to lend to the Japanese government for the next decade:
Historical day. Japan's 10y yield goes negative, the first time a G7 country's 10y yield has done so: pic.twitter.com/NvZk0GFsLdHistorical day. Japan's 10y yield goes negative, the first time a G7 country's 10y yield has done so: pic.twitter.com/NvZk0GFsLd
Yield is the interest rate on a bond. A high yield means a bond is riskier, while safe-haven assets yield less.Yield is the interest rate on a bond. A high yield means a bond is riskier, while safe-haven assets yield less.
Short-term German and Japanese bonds have been negative for a while, reflecting the fact that they’re a solid place to put your money (especially as there are negative interest rates in Japan and the eurozone).Short-term German and Japanese bonds have been negative for a while, reflecting the fact that they’re a solid place to put your money (especially as there are negative interest rates in Japan and the eurozone).
But for a 10-year bond to be negative? That shows investors are pricing in weak economic growth, and turmoil, for some time.But for a 10-year bond to be negative? That shows investors are pricing in weak economic growth, and turmoil, for some time.
10.37am GMT10.37am GMT
10:3710:37
Nice summary of the situation from Bloomberg:Nice summary of the situation from Bloomberg:
- Europe stocks calmer- Follows 6-day selloff- Japan fell 5% earlier- Oil back above $30https://t.co/llKqjOIhVI pic.twitter.com/5r8mbe7SZa- Europe stocks calmer- Follows 6-day selloff- Japan fell 5% earlier- Oil back above $30https://t.co/llKqjOIhVI pic.twitter.com/5r8mbe7SZa
10.27am GMT10.27am GMT
10:2710:27
if you’re just tuning in, here’s our latest news story on the upheaval in the global markets:if you’re just tuning in, here’s our latest news story on the upheaval in the global markets:
Related: World markets in turmoil for a second dayRelated: World markets in turmoil for a second day
10.20am GMT10.20am GMT
10:2010:20
Japanese selloff hits investorsJapanese selloff hits investors
The huge selloff in Japan overnight has hit sentiment hard in the City today.The huge selloff in Japan overnight has hit sentiment hard in the City today.
Investors had been hoping that the Chinese New Year holiday would bring some calm; instead, traders have been staring at a 918-point tumble on the Nikkei.Investors had been hoping that the Chinese New Year holiday would bring some calm; instead, traders have been staring at a 918-point tumble on the Nikkei.
Alastair McCaig of spread-betting firm IG explains:Alastair McCaig of spread-betting firm IG explains:
Any hope investors might have had that the absence of China would enable markets to reduce volatility and rebalance some of the overly bearish sentiment has been quashed by Japan.Any hope investors might have had that the absence of China would enable markets to reduce volatility and rebalance some of the overly bearish sentiment has been quashed by Japan.
In London, the Footsie is struggling to hold onto any gains, while there are further losses across Europe - on top of Monday’s rout.In London, the Footsie is struggling to hold onto any gains, while there are further losses across Europe - on top of Monday’s rout.
The Italian market has lost another 1%, as fears over its banking sector mount up (see this earlier post for details)The Italian market has lost another 1%, as fears over its banking sector mount up (see this earlier post for details)
The government debt of some peripheral European countries, including Portugal and Greece, is coming under pressure today. Is the eurozone debt crisis rearing up again?....The government debt of some peripheral European countries, including Portugal and Greece, is coming under pressure today. Is the eurozone debt crisis rearing up again?....
McCaig says it’s another worry:McCaig says it’s another worry:
The situation in Greece was never resolved, merely delayed until later.The situation in Greece was never resolved, merely delayed until later.
Greek 10-year sovereign debt is now yielding over 10% – a jump of 25% in little over a month, and 50% from its lows in November last year.Greek 10-year sovereign debt is now yielding over 10% – a jump of 25% in little over a month, and 50% from its lows in November last year.
10.07am GMT10.07am GMT
10:0710:07
Britain's trade gap has widened to new highBritain's trade gap has widened to new high
The gap between what Britain imports and exports has hit a record high, in a worrying signal.The gap between what Britain imports and exports has hit a record high, in a worrying signal.
During 2015, the UK imported around £10bn more physical stuff than it exported each month. And that means Britain posted a trade in goods deficit of £125bn last year, up from last year’s all time high of £123.1bn.During 2015, the UK imported around £10bn more physical stuff than it exported each month. And that means Britain posted a trade in goods deficit of £125bn last year, up from last year’s all time high of £123.1bn.
Worryingly, UK good exports fell by £8.1bn last year, while imports of goods fell by £6.2bn.Worryingly, UK good exports fell by £8.1bn last year, while imports of goods fell by £6.2bn.
That was partly balanced by Britain’s a £90bn surplus in service sector trade (the City does have its uses). But overall, the annual trade deficit widened to £34.7bn in 2015, up £0.3 billion from 2014.That was partly balanced by Britain’s a £90bn surplus in service sector trade (the City does have its uses). But overall, the annual trade deficit widened to £34.7bn in 2015, up £0.3 billion from 2014.
Here’s the report.Here’s the report.
In December alone, the trade gap came in at £2.7bn.In December alone, the trade gap came in at £2.7bn.
And this is bad news for the economic recovery, as net trade is continuing to drag on growth. It knocked one whole percentage point off GDP growth in the third quarter of 2015, for example.And this is bad news for the economic recovery, as net trade is continuing to drag on growth. It knocked one whole percentage point off GDP growth in the third quarter of 2015, for example.
The ONS also warns that growth in UK exports to China slowed last year...The ONS also warns that growth in UK exports to China slowed last year...
It says:It says:
The slower growth in UK exports to China may reflect the easing in output growth and domestic growth in China, lowering the demand for UK goods and services.The slower growth in UK exports to China may reflect the easing in output growth and domestic growth in China, lowering the demand for UK goods and services.
9.45am GMT9.45am GMT
09:4509:45
There’s no prospect of the global oil glut ending anytime soon.There’s no prospect of the global oil glut ending anytime soon.
That’s the latest warning from the International Energy Agency. The IEA has just predicted that the world will be stockpiling excess oil for most of 2016, as the price war launched by OPEC has failed to kill the US shale industry.That’s the latest warning from the International Energy Agency. The IEA has just predicted that the world will be stockpiling excess oil for most of 2016, as the price war launched by OPEC has failed to kill the US shale industry.
The IEA also cut its forecast for oil demand this year, which will only add to the glut.The IEA also cut its forecast for oil demand this year, which will only add to the glut.
And as for prices, the IEA says it is “very hard to see how oil prices can rise significantly”, if crude oil stockpiles continue to grow.And as for prices, the IEA says it is “very hard to see how oil prices can rise significantly”, if crude oil stockpiles continue to grow.
IEA: market awash in oil. Very hard to see how prices can rise significantly in short term. Short-term risk to the downside has increased.IEA: market awash in oil. Very hard to see how prices can rise significantly in short term. Short-term risk to the downside has increased.
Oil is currently changing hands at $33 per barrel -- good news for consumers, and countries who import the stuff. But it’s already having a serious impact on petro-producers such as Russia and Saudi Arabia, energy companies, and the banks who have lent to them....Oil is currently changing hands at $33 per barrel -- good news for consumers, and countries who import the stuff. But it’s already having a serious impact on petro-producers such as Russia and Saudi Arabia, energy companies, and the banks who have lent to them....
9.33am GMT9.33am GMT
09:3309:33
Has the stock market selloff gone too far?Has the stock market selloff gone too far?
Banking analyst Sandy Chen argues that there are bargains out there. He points out that some banks, including Royal Bank of Scotland, Barclays and HSBC, are now trading significantly below their ‘book value’ (their market capitalisation is below the actual value of their assets).Banking analyst Sandy Chen argues that there are bargains out there. He points out that some banks, including Royal Bank of Scotland, Barclays and HSBC, are now trading significantly below their ‘book value’ (their market capitalisation is below the actual value of their assets).
Chen says:Chen says:
Looking at valuations, it appears that another Global Financial Crisis is already priced-in.Looking at valuations, it appears that another Global Financial Crisis is already priced-in.
These low valuations were only seen in the depths of the 2008/9 financial crisis, after Lehman Brothers failed. So the City is pricing in some “horrendous losses”.These low valuations were only seen in the depths of the 2008/9 financial crisis, after Lehman Brothers failed. So the City is pricing in some “horrendous losses”.
Clearly the situation in China isn’t pretty, as Beijing tries to avoid a hard economic landing. But Chan argues the Chinese banks and regional authorities will absorb the brunt of the losses.Clearly the situation in China isn’t pretty, as Beijing tries to avoid a hard economic landing. But Chan argues the Chinese banks and regional authorities will absorb the brunt of the losses.
So, this could be a good moment for ‘value investors’ to dip back into the market. Or, the City might be right, and the financial sector could be heading into another big crisis. Caveat emptor....So, this could be a good moment for ‘value investors’ to dip back into the market. Or, the City might be right, and the financial sector could be heading into another big crisis. Caveat emptor....
9.24am GMT9.24am GMT
09:2409:24
This is why banks are in troubleThis is why banks are in trouble
Banks are being hit by a “dangerous cocktail” of risks, warns Mike van Dulken of City firm Accendo Markets.Banks are being hit by a “dangerous cocktail” of risks, warns Mike van Dulken of City firm Accendo Markets.
Those risks include:Those risks include:
And that’s why European bank shares have lost a quarter of their value this year.And that’s why European bank shares have lost a quarter of their value this year.
9.14am GMT9.14am GMT
09:1409:14
Curious scenes in Frankfurt today, where traders have dressed up in carnival costumes for Shrove Tuesday....Curious scenes in Frankfurt today, where traders have dressed up in carnival costumes for Shrove Tuesday....
8.58am GMT8.58am GMT
08:5808:58
Bank shares hit againBank shares hit again
European banks are coming under the cosh this morning, as investors anticipate further problems ahead.European banks are coming under the cosh this morning, as investors anticipate further problems ahead.
The Stoxx 600 Banks index, which tracks financial stocks across Europe, has fallen by 1.7% already today. That follows a 5.6% fall yesterday.The Stoxx 600 Banks index, which tracks financial stocks across Europe, has fallen by 1.7% already today. That follows a 5.6% fall yesterday.
The sector has now lost 25% of its value since the start of 2016, as fears of a global downturn have savaged market valuations.The sector has now lost 25% of its value since the start of 2016, as fears of a global downturn have savaged market valuations.
Italian banking stocks are leading the fallers, reflecting concerns that they are bogged down with bad loans.Italian banking stocks are leading the fallers, reflecting concerns that they are bogged down with bad loans.
Prime Minister Renzi’s government is pushing Italian banks to clean up their balance sheets, but an economic downturn could make the problem even worse.Prime Minister Renzi’s government is pushing Italian banks to clean up their balance sheets, but an economic downturn could make the problem even worse.
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Mining stocks are taking a hammering this morning, dragging the Footsie into the red again:Mining stocks are taking a hammering this morning, dragging the Footsie into the red again: