Global News October 8, 2015

  1. Bloomberg News
  2. Global News October 8, 2015

Bloomberg Business

-German exports slump: In the steepest drop since January 2009, German exports fell 5.2 percent in August, much more than the 0.9 percent estimated by economists. Imports slid 3.1 percent leaving Germany’s trade surplus at €15.3 billion ($17.2 billion) for the month. This adds to what has already been a bad week for German data amid signs of a slowdown in Europe’s largest economy. The DAX Index of German stocks was 0.1 percent lower at 10:40 a.m. London time.

-Chinese markets reopen: The Shanghai Composite Index closed 3 percent higher in its first session after its week-long break due to a Chinese national holiday. The rally was led by automakers after the government reduced the purchase tax on vehicles through the end of next year. Bocom International Holdings Co.’s Hao Hong, the strategist famous for calling both the start and the peak of China’s stock boom, has described this rally as an opportunity to sell as he sees no bull case in Chinese equities.

-Deutsche Bank takes writedown: Deutsche Bank expects to report a €6.2 billion ($7 billion) third-quarter loss and may eliminate its dividend as it writes down the value of its two biggest divisions and boosts legal-cost reserves. Co-CEO John Cryan said that bonuses at the bank would also have to be cut meaning the bank may struggle to retain senior staff. Shares in the bank were 0.3 percent higher at 11:00 a.m. London time after dropping as much as 3.6 percent at the open before trading 2.7 percent higher in a volatile open to the session.

-Bank of England and the ECB: The Bank of England announces its monetary policy decision at 7:00 a.m. ET, with all 41 economists surveyed by Bloomberg expecting no change from the bank. The bank will also publish its assessment of the economy today which markets will watch for clues to the likelihood of the timing of a future rate rise. Seperately, the ECB will publish an account of its latest monetary policy meeting which may show how much support there is on the board of the bank for extending the current QE program beyond September 2016.

-Volkswagen problems continue: Doubts have been raised over the level of Volkswagen AG reported death and injury claims in the U.S. over the last decade as the numbers have been so good as to make some industry experts question their validity. Already this year, Honda Motor Co. has been fined in the U.S. for underreporting claims and Volkswagen’s reported claims are significantly below the number Honda was fined for.

CNN Money

-M&A on my mind: Two powerful Chinese Internet startups — essentially the Yelp and Groupon of China — have joined forces in a deal that is reported to be worth $15 billion. The firms — Meituan and Dianping — said Thursday that they would jointly establish a new company. Meituan and Dianping are backed by tech giants Alibaba (BABA, Tech30) and Tencent (TCEHY). In the U.S., Dell and data-storage firm EMC (EMC) are reportedly in discussions about a business combination. Shares in EMC surged by about 8% in extended trading after the merger chatter began.  And in Europe, investors are still waiting for more news on whether AB InBev (BUD) and SABMiller (SBMRY) will merge.

-Market overview: U.S. stock futures are sinking and the overall market mood is muted. European markets are mixed in early trading. Asian markets also ended with mixed results. In China, stock markets reopened after an extended holiday and the key indexes rose by 3% to 4%. «The Chinese equity market re-opened and bounced, but not as much as some hoped,» noted Kit Juckes, a global strategist at Societe Generale. The main stock market indexes were on a roll Wednesday. The Dow Jones industrial average rose 0.7%, the S&P 500 jumped 0.8% and the Nasdaq climbed up 0.9%.

-Market movers — Deutsche Bank, Fiat Chrysler, Volkswagen: Shares in Deutsche Bank (DB) are swinging wildly between losses and gains in Germany after the bank revealed it will book a nearly $7 billion loss in the third quarter for a write down related to its corporate banking unit. Shares in Fiat Chrysler (FCAU) are rallying by about 4% in Europe after the United Auto Workers union said it reached a tentative agreement with the automaker. This could avert a strike by 40,000 workers. Shares in Volkswagen (VLKAY) could see higher-than-normal trading activity when the head of the firm’s U.S. business — Michael Horn — appears before U.S. lawmakers at 10 a.m. ET to face questions on the automaker’s emissions scandal.

Earnings and economics: Domino’s Pizza (DPUKY) will report quarterly earnings before the opening bell. Then after markets close, investors will hear from Alcoa (AA) and Ruby Tuesday (RT). On the economic front, the Federal Reserve’s Open Market Committee will post the minutes from its September meeting at 2 p.m. ET. Investors will parse through these notes for more information about the Fed’s plans for a future rate hike. In Germany, there was some disconcerting data showing a 5% slump in exports between August and July. That’s the biggest monthly decline in exports since January 2009. It’s also worth noting that this is before the Volkswagen scandal emerged in September.