The sentiment in the US stock markets changed

Market movers today

• The markets will continue to monitor the problems with Deutsche Bank today. Regarding key figures, there is focus on Euroland inflation, which is expected to increase, as both German and Spanish inflation rose yesterday.

• In the US, we have a string of data due out – PCE deflator, personal income and spending, and the Chicago PMI.

Selected market news

The sentiment in the US stock markets changed yesterday given the problems with Deutsche Bank and some hedge funds have been said to reduce their exposure to Deutsche Bank. The speculation of a new crisis is rising and we are seeing some of the usual safe haven ‘signs' with buying of Swiss francs, rising VIX volatility as well as a decline in bond yields. On top of healthcare, shares fell in the US as speculation regarding tighter regulation will hurt profits in the sector.

Most of the Asian equity markets have followed the negative trend from the US despite a modest rise in the oil price, but the fear that the problems in Deutsche Bank will spread to the global financial sector is outweighing the positive sentiment after the OPEC deal on Wednesday.

In the currency markets, we have seen modest movements in the major FX crosses this morning. Swiss francs are gaining versus the euro as mentioned above. The Norwegian krone is also benefiting from the OPEC deal and briefly tested the 9.00 level before bouncing back to the 9.03 level, where it is trading this morning.

The string of data out of Japan this morning showed only a modest recovery and inflation continued to decline – so, growth momentum is likely to be weak in the Japanese economy. Inflation dropped to -0.5% y/y in August.

Overnight in China, the Caixin PMI manufacturing for September was released. The index rose marginally from 50.0 in August to 50.1 in September in line with expectations. New orders rose to 50.8 from 50.6.New export orders rose to 50.1 from 49.3, the first print above 50 since November. Overall, the Caixin PMI manufacturing supports our view that the moderate recovery continues. The recovery is driven by (a) fiscal stimuli via infrastructure investments, (b) a recovery in the construction sector due to strong home sales and a reduction in home inventories and (c) a moderate export recovery supported by a 10% weakening of the CNY. We still expect to see some moderation in the recovery going into 2017 as the stimulus effect fade slightly and the biggest boost to construction should fade. See also Research China outlook, 26 September 2016.

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