Tuesday 11:00 BST. Stocks and government bond yields are falling as sliding oil prices and lingering concerns about the European banking system counteract an initial risk asset rally delivered by the first US presidential debate.

The pan-European Stoxx 600, which shed 1.6 per cent on Monday, is down another 0.5 per cent as Deutsche Bank shares fall to a fresh record low amid worries about its capital position. The European banking sub-index, off 2.7 per cent in the previous session, is down 1.2 per cent.

Fearful traders are seeking supposed safety in government bonds. The yield on 10-year German Bunds, which move inversely to the bond price, are down 3 basis points to minus 0.14 per cent, while equivalent maturity Treasuries are easing 1bp to 1.58 per cent.

Also weighing on sentiment is a fall for energy stocks as oil prices stumble anew. Prices jumped more than 3 per cent on Monday amid renewed hopes that producers at a meeting in Algeria could lay the groundwork for the first co-ordinated Opec output cut since the financial crisis.

But fresh comments from participants suggest any deal is currently unlikely, and so Brent crude, the international benchmark, is down 1.5 per cent at $46.62 a barrel, while West Texas Intermediate is off 1.3 per cent at $45.62.

US equity index futures suggest the S&P 500 will add 0.2 per cent to 2,151 when the opening bell rings later on Wall Street.

Earlier trading saw the S&P in line for a 0.7 per cent pop as investors seemed to react positively to the first US debate between Hillary Clinton and Donald Trump.

“Hillary Clinton appears to have edged above her Republican opponent Donald Trump in the first presidential debate, if market reaction is a barometer to read this,” said analysts at Citi.

Some investors are worried that, if elected, Mr Trump’s policy of renegotiating trade agreements — notably with China and in relation to Nafta — could deliver a diplomatic and economic dislocation.

Thus, Tuesday’s rebound in S&P 500 futures and a surge in the Mexican peso are being interpreted as a sign that traders think the Clinton/Trump debate may have reduced the chances of the latter winning in November.

“A snap poll of 1,000 debate watchers from Public Policy Polling after the first of the three US presidential debates last night found 51 per cent thought Mrs Clinton had won, 40 per cent thought Mr Trump came out on top and 9 per cent were unsure,” noted analysts at RBC Capital Markets.

“Financial markets are also judging it in favour of Clinton as US stock index futures reversed losses (Dow futures briefly added 100 points during the debate) after the debate was over,” they added.

The peso, which the market has used as a close inverse proxy to Mr Trump’s poll numbers, hit a record low in early Asian trade but is now 1.5 per cent stronger at 19.5762 pesos per dollar.

“Emerging markets … fear that free trade globally would suffer under Mr Trump. Here, the Mexican peso is regarded as a barometer of risk for emerging markets,” said analysts at DBS. “To be fair, the Mexican peso has also been depreciating on a widening current account deficit over the past few quarters.”

The Canadian dollar is 0.1 per cent firmer while the general improvement in currency sentiment could be seen in a fall for the yen — though this has been pared — and weakness in other supposed “havens” like gold.

The price of bullion is down 0.1 per cent to $1,337 an ounce and on track to end a six-day winning streak that had been supported by expectations the Federal Reserve would deliver fewer interest rate increases in 2017 than previously forecast.

Earlier in Asia, the mood improved with the bounce in US equity futures. Japan’s broad Topix index rose 1 per cent, reversing initial declines. In Australia the S&P/ASX 200 fell 0.5 per cent as miners pulled back, but Hong Kong’s Hang Seng rose 1.1 per cent. On the mainland, China’s Shanghai Composite added 0.6 per cent and the tech-focused Shenzhen Composite rose 0.75 per cent.

Additional reporting by Peter Wells in Hong Kong

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