By Lorcan Roche Kelly
One in five
Deutsche Bank AG’s radical overhaul announced over the weekend includes cutting 20% of the lender’s global workforce, exiting its equities business and paying no dividend this year or next. While analysts generally welcomed the news, they said costs may turn out to be higher than estimated and that some of the targets for the restructuring could be too ambitious. Shares in the bank opened higher, but were trading 1% lower by 5:50 a.m. Eastern Time in Frankfurt.
No head, new PM
The Turkish lira and stocks fell after President Recep Tayyip Erdogan surprised markets by removing the head of the country’s central bank on Saturday. Erdogan further undermined the institution’s independence by telling lawmakers that he expects both the successor and the rest of the establishment to toe the government’s line on monetary policy. Markets are much more pleased with other developments in the region, such as Greek elections putting an end to Syriza rule. Already the best performing stock index in the world this year, the only question is how much further the Greek benchmark will rise with a new pro-business prime minister in place.
End of independence
Joachim Fels at Pacific Investment Management Co. warns that sacking the head of Turkey’s central bank is another signpost on the road to the end of independent monetary institutions across the world. The most important battle on that front is the one playing out in Washington, where President Donald Trump’s calls for further easing may make it more difficult for the Federal Reserve to actually ease policy in one sense – by creating the perception Jerome Powell is bowing to political pressure. Speculation is rising that Trump may even be tempted to replace the Fed chief before his term ends in 2022.
Overnight, the MSCI Asia Pacific Index dropped 1.2% while Japan’s Topix index closed 0.9% lower as pharmaceuticals declined following Trump’s announcement of a plan to reduce the price the U.S. pays for drugs. In Europe, the Stoxx 600 Index was broadly unchanged at 5:50 a.m. as investors rotated out of defensive stocks. S&P 500 futures pointed to a lower open, the 10-year Treasury yield was at 2.030% and gold was higher.
Iran says it could enrich uranium at a higher purity level as the country continues pushing to undo the restrictions imposed in the 2015 nuclear deal. European leaders expressed their concern at the moves, while an Iranian official accused the signatories to the deal of not doing enough to uphold the accord. U.S. sanctions on the country are biting, with the latest data showing Iranian oil exports dropping to a three-decade low. Global oil prices are holding onto the gains made at the end of last week as tensions remain high.