Most Asian Index Futures Drop Amid Bank Rout; Oil, Copper Swing

(Bloomberg) -- Stock-index futures signaled most Asian benchmarks will end September with declines, threatening the longest run of monthly gains for global equities in more than two years. Crude oil flirted with losses.

Shares in New Zealand fell early Friday with U.S. index futures, as contracts on equity gauges in Japan, Australia and South Korea foreshadowed losses. Financial stocks drove the S&P 500 Index lower last session amid concern over Deutsche Bank AG as Bloomberg News reported hedge funds that do business with the lender have moved to cut their exposure. The yen extended declines, headed for its first weekly retreat in four. U.S. crude failed to build on its two-day gain, remaining above $47 a barrel after the OPEC output deal. Copper futures were little changed after rising the past two days, while gold advanced.

Anxiety over what Deutsche Bank’s woes say about the wider financial industry has potential to derail a third straight monthly advance in global stocks, their longest rally since June 2014. John Cryan, chief executive officer of the German lender, has been struggling to convince investors that the bank has the funds to deal with legal bills tied to past misconduct, including a request for $14 billion from the U.S. Department of Justice. Deutsche Bank shares have more than halved in value this year, while its default risk has soared.

“The Deutsche Bank situation is major,” said Timothy Ghriskey, who helps manage $1.5 billion as chief investment officer at Solaris Asset Management LLC in New York. “I’m not saying this is the beginning of a global financial crisis, aka 2008, but it’s certainly a cause for some concern.”

The hedge funds, which use Deutsche Bank’s prime brokerage service, have moved part of their listed derivatives holdings to other firms this week, according to an internal bank document seen by Bloomberg News. While the vast majority of Deutsche Bank’s more than 200 derivatives-clearing clients have made no changes, the hedge funds’ move highlights concern among some counterparties about doing business with Europe’s largest investment bank. The International Monetary Fund said in June that the bank may be the biggest contributor to systemic risk among the largest financial companies.

For more on the outlook for Deutsche Bank, click here.

Caixin’s manufacturing purchasing managers’ index for China is due Friday, along with factory PMIs for Malaysia, South Korea and Thailand, which also reports on trade and foreign reserves. Sri Lanka updates its CPI, while Indonesia and Malaysia issue data on money supply.

Japanese core consumer prices fell more than economists predicted in August, slipping 0.5 percent, versus the 0.4 percent decline that was anticipated. The jobless rate edged up, data Friday showed.

Stocks

New Zealand’s S&P/NZX 50 Index, the first major stock gauge to start trading each day, fell 0.5 percent as of 8:37 a.m. Tokyo time. The measure only has three financial members, with Auckland-based Heartland Bank Ltd. the biggest decliner, slipping 2.6 percent.

Futures on the S&P 500 dropped 0.2 percent after the underlying index declined 0.9 percent on Thursday, with financial stocks down 1.5 percent to their lowest point since Aug. 2. Wells Fargo and JPMorgan Chase & Co. dropped more than 1.5 percent Thursday, while U.S.-traded shares of Deutsche Bank slumped 6.7 percent to the lowest level since they were listed.

In Australia, futures on the S&P/ASX 200 Index were down 0.6 percent with those on the Kospi index in Seoul. Nikkei 225 Stock Average futures were bid down 1.3 percent to 16,510 in the Osaka pre-market, and dropped 1.4 percent to 16,445 in Singapore. Yen-denominated contracts on the Japanese index declined 0.5 percent to 16,445 in Chicago.

Futures on Hong Kong’s Hang Seng Index were steady in most recent trading as contracts on the Hang Seng China Enterprises Index added 0.1 percent. FTSE China A50 Index futures fell 0.3 percent. Markets in mainland China are shut next week for National Day holidays.

Commodities

West Texas Intermediate crude dropped 0.1 percent to $47.78 a barrel, after gaining more than 7 percent over the previous two days.

While Wednesday’s agreement among Organization of Petroleum Exporting Countries imposed an overall production cap on the group of 14 oil producers, it didn’t assign individual limits -- that was left to a committee that will report back at OPEC’s next meeting in November. Agreeing and monitoring those targets will be fraught.

“They still need to come up with those individual country quotas,” Amrita Sen, chief oil analyst at consulting firm Energy Aspects Ltd. in London, said Thursday in a Bloomberg Radio interview. “The devil is in the detail.”

Copper futures due in December dropped 0.1 percent to $2.1870 a pound on the Comex, helping them down 0.6 percent in the week. Gold for immediate delivery rose 0.2 percent to $1,322.43 an ounce, trimming its drop in the week while boosting its September advance to 1 percent.

--With assistance from Anthony DiPaola To contact the reporter on this story: Emma O'Brien in Wellington at eobrien6@bloomberg.net. To contact the editors responsible for this story: Emma O'Brien at eobrien6@bloomberg.net, Andreea Papuc

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