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Sep 16, 2016

Bloomberg Markets: Five Things You Need to Know To Start Your Day, by Lorcan Roche Kelly - September 16, 20216

Bloomberg Markets

Lorcan Roche Kelly

Deutsche Bank rejects a $14 billion fine, European leaders have a summit without the U.K. and commodity prices may end the year with a whimper. Here are some of the things people in markets are talking about today.

Deutsche Bank fine

Shares in Deutsche Bank AG had slumped 7.2 percent by 5:45 a.m. ET, after reports emerged about the size of a U.S. Justice Department claim for the settlement of an investigation into the firm's mortgage-backed security sales. The bank says it is unwilling to pay anywhere near the $14 billion demanded — coincidentally a similar size to the tax bill the EU recently presented to Apple Inc. While Deutsche Bank's fights its own battles, other banks in Europe are finding that having too much cash can also cause problems. 

European summit

Leaders of the European Union’s 27 nations — minus the U.K. — are meeting in the Slovak capital Bratislava as leaders try to fight a surging wave a populism across the union. German Chancellor Angela Merkel warned that Europe is not at all in a good state in a speech ahead of the meeting, which will also likely be dominated by the fallout from the Brexit vote. The one place the summit is expected to provide agreement is on climate change, with a target for ratification of the Paris Climate Accord anticipated as early as next month.

Commodity slump

Crude oil remains in the doldrums, with a barrel of West Texas Intermediate for October delivery trading at $43.37 at 6:09 a.m. ET. The problems in commodities are by no means exclusive to oil, as the Bloomberg Commodity Index is heading for a third-quarter slump after gaining in this first half of the year. In base metals, copper is the out-performer in the last week after lagging far behind its peers this year, while zinc prices slipped. Gold was also lower.

Markets slip

Overnight, the MSCI Asia Pacific Index rose 0.6 percent with markets shut for holidays in China, Hong Kong, Taiwan, Malaysia and South Korea. In Europe, the Stoxx 600 Index was 0.35 percent lower at 6:14 a.m. ET, with financials, lead by Deutsche Bank, by far the biggest losers. S&P 500 Index futures slipped 0.2 percent.

Wells Fargo and the bonus battle

Wells Fargo & Co., the world's most valuable bank up until this week, may have given a gift to those in Washington who are trying to boost Wall Street regulation. The timing of the scandal over fake accounts, opened to meet bonus targets, means that banks' arguments against a proposed pay rule meant to limit risky behavior are unlikely to receive a welcoming ear on Capitol Hill

What we've been reading 

This is what's caught our eye over the last 24 hours.