LONDON: Worries about Europe’s bankswrenched stocks into reverse yesterday andhalted a surge in Mexico’s peso that followedDemocrat Hil lar y Clinton’s victor y overRepublican Donald Trump in the first US presi-dential debate. Europe’s mood soured asDeutsche Bank shares hit another record lowon nagging worries about the lender’s healthand left Wall Street futures pricing in barely arise for the S&P 500 and Dow Jones Industrial.

Trading was still expected to still be freneticafter a marathon TV debate between Trumpand Clinton on Monday evening that was esti-mated to have pulled in nearly 100 millionviewers.

Markets have tended to see Clinton as the

candidate of the status quo, while few are surewhat a Trump presidency might mean for USforeign policy, international trade deals or thedomestic economy. Snap polls after the debatesuggested Clinton had bolstered her chancesof winning November’s election. She accusedRepublican Trump of racism, sexism and taxavoidance while the real estate tycoon, makinghis first run for public office, said Clinton’s longyears of service represented “bad experience”.

For markets the clear victor was the Mexicanpeso, which surged as much as 2.3 percentafter hitting an all-time lows on fears that aTrump presidency would threaten Mexico’sexports to the United States, its single biggestmarket. Those gains had been pruned to just

over 1.6 percent before the start of US andMexican trading although the currency didn’tlook keen to give back much more.

“The Mexican peso has become the mainmarket proxy for Trump on-Trump off,” saidSaxo Bank’s head of FX strategy John Hardy,pointing to its near 9 percent fall versus thedollar this year.

“It was probably becoming a bit too cheap ...but as long as you don’t know the result of USelection that proxy (US election) risk is proba-bly going to stay.” Deutsche Bank wasn’t theonly European banks in the firing line. Shares inUK-based Standard Chartered fell 2.5 percenton reports that it was facing a US probe over anIndonesian investment.

Europe was also digesting news that areferendum over Italian Prime MinisterMatteo Renzi’s flagship constitutionalreform will be held on Dec 4, with the fateof his administration likely to hinge on theoutcome. It was one of the latest dates hecould have picked and gives him maxi-mum time to try and turn around what atpresent looks like a defeat. That offeredinvestors some comfort and Italian bondyields fell to a 2-1/2-week low.

“It is being kicked down the road quitea bit, this can,” said Rabobank’s head ofmacro strategy research Elwin de Groot.“He is trying to buy time but that couldalso be a risk. He is banking that he willwin back a bit of public support but thereis the possibility that he might not.”

OIL PRESSUREThere was mixed news from the

European Central Bank as data showedloans to eurozone businesses dippedslightly in August despite its massive stim-ulus program. The euro fell for the firsttime in five days, slipping 0.25 percent to$1.1225 and to 1.1563 per pound. Oil mar-kets were also in flux as the world’s largestproducers gathered in Algeria to discussways to tackle a crude glut that has bat-tered prices for two years now. A sourcefrom Iran, where production is on thecomeback after years of international sanc-tions, told Reuters it wanted 12.7 percentof any new OPEC output ceiling to help itreclaim its market share. Saudi Arabia hassuggested it would need Iran to freeze itsproduction for it to do the same.

In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan had recouped

early losses to rise 0.6 percent and Japan’sNikkei swung 0.8 percent higher, havingbeen down 1.5 percent at one stage. TheUS dollar rebounded as high as 100.83 yenfrom a one-month low around 100.08though it was fading again in the first flur-ry of New York trading as European bank-ing sector strains returned.

Hong Kong’s Hang Seng indexadvanced 1.1 percent to 23,571.79 andTokyo’s Nikkei 225 was up 0.6 percent at16,635.29. The Shanghai Composite Indexwas unchanged at 2,969.14. Seoul’s Kospiadded 0.9 percent to 2,017.94 andSydney’s S&P-ASX 200 rose 0.4 percent to5,497.40. India’s Sensex gained 0.2 percentto 28,342.26 and benchmarks in NewZealand and Thailand advanced. OtherSoutheast Asian markets declined.

The yen’s safe-haven counterparts werereclaiming ground too. Yields on US 10-year Treasuries, which move inversely toprices, dropped to a three-week low of1.54 percent, from 1.60 percent overnight.German two-year yields hit a record low asFinland became the third eurozone coun-try after Germany and the Netherlands tosee its 10-year yields drop below zero.“Deutsche Bank is a natural suspect for themove in the Bund yields,” said CiaranO’Hagan, strategist at Societe Generale.

Tokyo shares rose yesterday asinvestors gave Hillary Clinton the nodagainst rival Donald Trump in the first USpresidential debate. The Japanese markethad opened lower following declines onWall Street ahead of the highly anticipatedshowdown between the pair who arelocked in a neck and neck race for theWhite House. — Agencies

BU S INE S SWEDNESDAY, SEPTEMBER 28, 2016

Europe’s bank angst sours US debate rally