DB Deutsche Bank Aktiengesellschaft

By Joanne Chiu and Paul J. Davies 

U.S. stock futures followed Asian markets lower Monday amid investors' doubts that the Federal Reserve would cut interest rates as much and as quickly as expected.

Strong U.S. jobs data on Friday reduced market expectations for rate cuts from the U.S. central bank at its next meeting in July. The Dow Jones Industrial Average fell about 130 points at the open on Monday.

The pan-continental Stoxx Europe 600 index wavered between gains and losses. Asia posted steep declines, with the benchmark equity index in Shanghai dropping 2.6%, while Korea's Kospi was 2.2% lower.

Cyrix Wang, a fund manager at China Alpha Fund Management, said he has turned cautious on equities, as aggressive easing from the Fed now looks less likely. "That raises concerns about whether the current growth outlook is sustainable and the more expensive stock valuation is justified," he said.

Germany's DAX slipped 0.4% as Deutsche Bank fell 5.1% following the launch of yet another restructuring plan, which will see the German lender cut nearly 20,000 jobs, slash its balance sheet and significantly shrink its investment bank. The stock has had a volatile trading session, and was initially up more than 4%.

"[Deutsche Bank's] business review is more radical than expected, which we believe will support the shares in the short term," wrote Anke Reingen, an analyst at RBC Capital Markets in London. "However, as the plan pushes the profitability improvement further out in time, we see more value elsewhere in the sector."

Industrial production in Germany edged higher in May after April's sharp contraction, suggesting that economic growth continues to be subdued in the heart of Europe.

Meanwhile, bond prices rallied and yields fell across Europe and in the U.S., reversing some of Friday's moves. The German 10-year yield was minus 0.369%, while French and Italian yields also fell. In the U.S., 10-year U.S. Treasury yields fell to 2.031%, from 2.044% on Friday. Yields fall as prices rise.

In South Korea, technology stocks led the broader market down due to fresh concerns about Japan's export curbs on some semiconductor and display materials after a survey of Japanese voters showed broad support for the decision to tighten controls.

Turkey's lira fell nearly 2% on concerns about central-bank independence, after President Recep Tayyip Erdogan dismissed the bank's governor over the weekend.

In commodities, gold was up 0.5% at $1,407.00 per ounce and Brent crude oil was up 0.1% at $64.30.

--Shen Hong contributed to this article.

Write to Joanne Chiu at joanne.chiu@wsj.com and Paul J. Davies at paul.davies@wsj.com

(END) Dow Jones Newswires

July 08, 2019 09:46 ET (13:46 GMT)

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