ETX Capital Daily Market Bite, 1st October 2013: Markets Steady In Face Of US Government Shutdown
October 1, 2013 8:48 am
October 1st, 2013, Daily Market Bite from Ishaq Siddiqi Market Strategist.
Steady start for European equities despite the partial US government shutdown, the first in 17 years. On Monday, financial markets crumbled as investors booked profits on the combo of political drama in the US and Italy together with month-end and quarter-end position squaring. This morning, the risk tone improves somewhat as investors take the view that a partial shutdown, if resolved quickly, will do little damage to the overall health of the US economy. That does however mean that we will need to hear the right sounds out of Washington to feel confident enough that the shutdown will not damage economic growth. US lawmakers failed to bridge their differences over the budget and remain polarised still, leading to the shutdown which sees around 800,000 federal employees sent home on unpaid leave.
Republicans and Democrats must find some common ground and tackle their differences in order to formulate a new budget which will raise the debt ceiling. Though this looks hard found at the moment, the market is betting on a deal to be reached in the coming days. What’s more is that this shutdown means Federal Reserve chairman will be more inclined to hold back from tapering quantitative easing at the October policy meeting — in fact, as it stands, the US labour department has closed along with other agencies which means payrolls data will not be complied or released. So, liquidity addicted market participants appear to be relatively sanguine this morning, hoping that this shutdown could go as far as seeing the Fed hold back from tapering all together in 2013. Closer to home, we have PMI manufacturing releases from the euro zone, UK and the US — all of which will be in sharp focus.
October 1st, 2013, Daily Market Bite from Ishaq Siddiqi Market Strategist.
Steady start for European equities despite the partial US government shutdown, the first in 17 years. On Monday, financial markets crumbled as investors booked profits on the combo of political drama in the US and Italy together with month-end and quarter-end position squaring. This morning, the risk tone improves somewhat as investors take the view that a partial shutdown, if resolved quickly, will do little damage to the overall health of the US economy. That does however mean that we will need to hear the right sounds out of Washington to feel confident enough that the shutdown will not damage economic growth. US lawmakers failed to bridge their differences over the budget and remain polarised still, leading to the shutdown which sees around 800,000 federal employees sent home on unpaid leave.
Republicans and Democrats must find some common ground and tackle their differences in order to formulate a new budget which will raise the debt ceiling. Though this looks hard found at the moment, the market is betting on a deal to be reached in the coming days. What’s more is that this shutdown means Federal Reserve chairman will be more inclined to hold back from tapering quantitative easing at the October policy meeting — in fact, as it stands, the US labour department has closed along with other agencies which means payrolls data will not be complied or released. So, liquidity addicted market participants appear to be relatively sanguine this morning, hoping that this shutdown could go as far as seeing the Fed hold back from tapering all together in 2013. Closer to home, we have PMI manufacturing releases from the euro zone, UK and the US — all of which will be in sharp focus.
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