Business

Wall Street rallies, led by Deutsche Bank, financials

S&P; 500 futures were up 11.25 points by the close.

The German bank has been hurt by the U.S. Justice Department, which has requested Deutsche Bank pay a $14 billion fine for its role in selling risky residential mortgage backed securities in the run-up to the financial crisis back in 2008.

Lehman Brothers was, like Deutsche Bank and other major financial groups, closely connected to other banks.

"The bank's systemic significance is undeniable", Stephen Guilfoyle, chief market economist at Stuart Frankel & Co., wrote in a note.

After coming under pressure in the previous session, financial stocks showed a strong move back to the upside along with shares of Deutsche Bank. In the USA, the future of Wells Fargo CEO John Stumpf looks tenuous after an intense grilling by lawmakers over the unauthorised-account scandal.

Cryan, in the letter, also said that the bank meets all capital requirements, and that its capital ratio would be further helped by the offloading of British insurer Abbey Life and the pending sale of its holdings in China's Hua Xia Bank. "All of the problems that were there this morning are still there and will still be there next week". Silver rose three cents to 19.21 dollars an ounce. The so-called "fear index" closed down 5.2% at 13.29. Among U.S. banks, JPMorgan Chase added 68 cents, or 1 percent, to $66.33 and Citigroup gained 61 cents, or 1.3 percent, to $46.41.

Energy stocks also extended gains, climbing 1.3%. Copper gained 2 cents to $2.21 a pound.

Meanwhile, the Commerce Department said personal spending was virtually unchanged in August following a 0.4 percent increase in July. The consumer discretionary component rose by a similar amount.

Investors are also awaiting quarterly reports from corporate America.

The S&P; financial sector gained 1.4 per cent on Fridaty, its best day in about two months.

However its trading relationships with the world's largest financial institutions make a potential breakdown at Deutsche a bigger risk to the wider financial system than any other global bank, the International Monetary Fund said in June. Hennes & Mauritz slid after the fashion retailer reported worse-than-estimated revenue growth in September. Hong Kong's Hang Seng index sank 1.9 percent.

The MSCI Emerging Markets Index dropped for the first time in four days, while still heading toward its best quarter since 2012. The U.S. dollar was unchanged, and gold (http://www.marketwatch.com/story/gold-draws-hideout-demand-as-deutsche-bank-rattles-markets-anew-2016-09-30) settled down 0.4% at $1,320.20, almost flat for the quarter.

"If rumours of a much-lower-than-expected fine are substantiated, this will be positive for European banks of course, but also the EUR/USD as well", said Brad Bechtel, a currency strategist at Jefferies Group LLC in NY.

The Dow climbed 164.70 (+0.91 percent) to finish at 18,308.15. While the gains for oil prices have slowed, investors were still optimistic that energy companies will book larger profits as a result.

The lender's €1.75 billion (S$2.7 billion) of 6 per cent additional Tier 1 bonds, the first notes to take losses in a crisis, fell as much as five U.S. cents on the euro to 69 United States cents, a record low, according to data compiled by Bloomberg.

Deutsche Bank has been on shaky ground since the 2008 financial crisis, with repeated scandals forcing it to set aside billions to cover legal costs and fines.

Customers enter a Deutsche Bank branch in Boblingen, Germany.

Benchmark US crude oil rose 41 cents to 48.24 dollars a barrel in NY, and it rose 8% over the last three days. Oil surged the most in more than five months after the announcement of the deal, which will see the Organisation of Petroleum Exporting Countries reduce production to a range of 32.5 million to 33 million barrels a day.

"It is surprising to hear the [German Chancellor] Merkel saying they will not help Deutsche Bank, but it's also possible she is saying this to get the USA government to rethink the size of the fine".

stayontheblack.com

Wall Street rallies, led by Deutsche Bank, financials