30 September 2016 at 11:31 GMT
Deutsche Bank shares continue their collapse as fears concerning the European banking sector's stability infect asset after asset, index after index.
The selloff seen in financials and equities in general is boosting precious metal prices, with silver the largest beneficiary as banking shares struggle and credit spreads grow.
Oil traders, meanwhile, are grappling with the ambiguity behind the headlines as markets weigh just how much of a positive the long-rumoured Opec deal will prove.
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Heavy trading in some of the FX crosses Friday midsession with markets selling EUR following the selloff in EU financials.
Recent macro on Germany’s Retail Trade (minus 0.4% versus 0.1 expectated) was not very supportive either. NOK rallied below the key level of 9.00 in the cross with EUR, following better than expected unemployment data coming at 2.8% versus 2.9% previous estimation.
EURUSD is traded below both 1.1180 and it’s 200-day moving average, losing 0.4% during the daily session. USDJPY had some volatility during the morning hours, ranging from 100.75 to 101.75. Signs of stabilisation seen with current price balancing above 101. GBP recovering from the morning losses into positive territory versus the dollar. Currently bounced to 1.298 on UK Quarterly GDP numbers beating estimates (0.7% versus 0.6% expected), still below key resistance of 1.30.
FX Options volatilities
EURUSD: Volatility traded higher on the back of Deutsche Bank worries. Risk reversals were the biggest mover with three-month and out moving a lot higher (due to the Italian referendum).
Same goes for other euro crosses.
Bunds traded higher as the risk-off sentiment and Deutsche Bank weighted on the markets. The yields on 10-year bunds hit their lowest level since July while on the flipside, for examplem Portuguese bonds did not benefit from general risk-off sentiment and the yield spread is getting back to the extreme levels seen back in February.
European stock markets fell Friday as the pressure on banks hurt national indexes. The CAC 40 was down 1.4%, the FTSE MIB gave up 1.2%, and the FTSE 100 was 1% lower.
The biggest losses were seen in Spain where the IBEX 35 dropped 2% as heavyweights Banco Santander and BBVA fell 4% each
In Germany, Deutsche Bank was off 4.5%, after losing more than 7% early in the session. The stock traded briefly under €10, its lowest level on record, as the market got its first chance to react to reports that some of the bank’s biggest clients have been pulling out funds.
Deutsche Bank’s woes infected the rest of the European banking sector, which tumbled as concerns about the German bank intensified. Commerzbank fell 5.5%, Credit Agricole dropped 3.2%, and Barclays shed 2.4%.
Telefónica shed 4.4% after the Spanish telecommunications company cancelled a planned initial public offering of its Telxius infrastructure business on Thursday because of tepid investor demand.
Airbus Group declined 1.2%, with the aerospace heavyweight set to cut an unspecified number of management jobs as part of a restructuring plan.
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Europe's big banks are under both scrutiny and pressure in asset markets today. Photo: iStock
— Edited by Michael McKenna