Global stocks slip ahead of US presidential debate

PUBLISHED : Tuesday, 27 September, 2016, 4:34am
UPDATED : Tuesday, 27 September, 2016, 4:34am

Stock prices around the world fell on Monday ahead of the first US presidential debate between Hillary Clinton and Donald Trump, while oil prices rose in advance of an informal OPEC meeting in Algeria on hopes for an output cut.

Half of America’s likely voters will rely on the presidential debates to help them make their choice between the two major US party nominees in the November 8 election, according to a Reuters/Ipsos poll released on Monday.

“Investors are acting extremely nervous with regards to the debate ... and it highlights the fact that the markets are not focusing on the health of the economy, interest rates and geopolitical events,” said Robert Pavlik, chief market strategist at Boston Private Wealth.

The Dow Jones industrial average fell 166.62 points, or 0.91 per cent, to finish on Monday at 18,094.83, the S&P 500 declined 18.59 points, or 0.86 per cent, to 2,146.1 and the Nasdaq Composite decreased 48.26 points, or 0.91 per cent, to 5,257.49.

European stocks fell, dragged down by a pullback in the shares of major banking and energy companies. Deutsche Bank shares hit a record low on worries about Germany’s biggest lender in the wake of a massive US$14 billion demand from the US Department of Justice to settle claims on bad mortgage-backed securities.

Europe’s broad FTSEurofirst 300 index closed at 1,338.26, down 1.6 per cent for its worst one-day loss since July 6.

Japan’s Nikkei stock index ended 1.3 per cent lower.

The MSCI world equity index, which tracks shares in 45 nations, fell 3.9 points, or 0.9 per cent, to 416.08.

Oil prices rose as much as 4 per cent after Algeria’s energy minister said on Sunday that all options were possible for an output cut or freeze at this week’s informal meeting of OPEC producers.

Brent crude settled $1.46, or 3.18 per cent, higher at $47.35 a barrel. US crude settled up $1.45, or 3.26 per cent, at $45.93 per barrel.

Bank of Japan Governor Hiruhiko Kuroda said Monday the central bank would use all tools necessary to get inflation back to its 2 per cent target, but his remarks did little to shift a conviction among bank analysts that the Bank of Japan is increasingly unable to weaken the yen.

The dollar shed 0.7 per cent to 100.25 yen, moving back toward a one-month low of 100.10 touched last week, while the euro fell 0.5 per cent to 112.82 yen.

The greenback has fallen since the US Federal Reserve’s downgrade of its economic outlook last week. It also hinted it is in no rush to raise US interest rates although it left the door open for a possible hike in December.

Bets on a gradual pace of US rate increases, together with jitters about the outcome of the US presidential election in about six to seven weeks, underpinned demand for US and German government debt, sending their 10-year yields to their lowest in over two weeks.

US 10-year Treasury note yield slipped 3 basis points at 1.584 per cent, while the German 10-year yields fell 2 basis points to minus 0.10 per cent.

Spot gold prices erased their initial gains as earlier buying linked to a weaker dollar and safehaven demand in advance of the presidential debate faded. They were last down 0.09 per cent, at $1,340.5 an ounce.