Both the U.S. futures and the European stocks fell on Monday amidst few recent developments. There are geopolitical tensions in Asia and the U.S. President Donald Trump accused the outgoing US President Barack Obama of wiretapping him.
The biggest lender of Germany Deutsche Bank said that it needs to raise capital worth 8 billion euros for which it will issue more shares. This news led to a fall of 5% in the shares of Deutsche Bank. Both Germany’s DAX and FTSEuro First index, which has 300 leading shares listed on it, fell by 0.7 percent and a major contributor to this fall was Deutsche Bank. The banking index of Europe was also down by a percent.
A trader at Frankfurt-based Alpha, Stefan de Schutter said, “The question is whether this will be the last capital hike or whether the bank will need more yet again in a few years. Until now, none of the restructuring measures has borne fruit.“
Dow was shining brightly till last week crossing the psychologically important level of 21,000 comfortably, but the fall of 0.5% in the US stock futures is bound to affect it too.
With North Korea firing four ballistic missiles in a day and a spat arising between South Korea and China over the issue of missile defence, this led to geopolitical tensions in East Asia.
The US markets have expectations that the Fed rate hike is very much on the cards in the March 14-15 meeting itself and by the way, markets have moved last week – it seems it has already factored in this. The investors are now looking for some clarity on Trump’s fiscal plans, which they were unable to get from Trump’s maiden speech at the Congress earlier last week.
The latest accusation of Trump on Obama is seen as Trump’s style of distracting the attention from the economic agenda by some of the people.
The rally on the US markets is going intact since November 8th when Trump was declared the President-elect. The markets rallied on his promises of tax reforms, increase in infrastructure spending, and keeping the interests of Americans his first and foremost priority. It was further fuelled when the US economic data showed that the economy is doing well and many Fed officials gave hints that rate hike is very much on the cards.
But the recent developments made investors take away some profit and both the dollar and the treasury yields went down on Monday.