Spreadex Market Analysis: Euro Equities Lower, Stocks Decline

AM Analysis – “Euro equities open lower this morning” – David White
European equities have opened lower this morning on news that US lawmakers have failed to make any agreement over either the shutdown or the debt ceiling over the weekend. And risk assets are likely to keep hurting the longer this goes on, perhaps presenting an opportunity to those who doubt the reality of a US default.

The FTSE 100 struggles to hold 6,400 as traders look to rebalance against downside risk this morning. A lot of what has performed strongly over the past three months within the index is experiencing an element of mean reversion, allowing investors a chance to participate at lower prices. But the feeling at present is one of nerves, making putting money to work easier said than done.

Investors will be watching dollars, gilts and gold for an idea of risk appetite tied to US news flow and will be fast to act if changes occur. Gold trades unchanged at $1,310.

PM Analysis – “Stocks continue their decline” – Lee Mumford
Stocks continued their decline heading into the afternoon as US lawmakers remained in deadlock over extending the debt limit to avoid default. The US government shutdown continued with no signs of a resolution after house speaking John Boehner vowed on Sunday not to raise the debt ceiling without a “serious conversation”.

John Boehner highlighted that the House cannot pass an increase to the US debt ceiling without other provisions put in place. However, President Barack Obama has hit back saying it won’t negotiate with Republicans.

Investors dumped risky assets in search of safe-havens, pushing up the price of gold. Crude retreated as the US entered the seventh day of shutdown, creating uncertainty about the demand for oil.

[The original articles by Spreadex can be found here.]

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