Spreadex Market Analysis: Lingering Uncertainty Over Shutdown

AM Analysis – “Obama meets congress for the first time since shutdown” – Alex Conroy
President Obama met congress for the first time since the shutdown last night in an attempt bring an end to the US government shutdown. This generated optimism in the markets with Asian stocks performing well overnight combined with a 6-month high for the Chinese Service Industry.

The meeting however proved futile with both sides unwilling to budge on positions held pre-shutdown and instead suggested a long and drawn out shutdown. This failure in bi-partisan politics could have wider implications than merely shutting down the US government. If the both sides continue to play chicken with each other and fail to agree before the debt ceiling deadline, Oct 17th, the government would only have cash left to pay bills and the chance of default goes from unthinkable to near certainty.

In UK news a big win for BP in its on-going Deepwater Horizon legal battle, compensation payments can now stop to companies that had not experienced actual injury traceable to loss. Investors will still be mulling over yesterday’s tory party conference where David Cameron closed on his outlook for the economic recovery and request from voters to let him finish the job.

PM Analysis – “Lingering uncertainty over the US government shutdown” – Lee Mumford
Lingering uncertainty over the US government shutdown continued to rattle markets with the shutdown extending to a third day. Leaders in Congress are still showing no sign of progress towards resolving the debt crisis after President Barack Obama met with Republican and Democratic leaders last night but failed to come up with a solution to put the country back on track.


Despite the negativity in the majority of global markets, the FTSE 100 has managed to keep its head above water, up 20 points at midday. BP has helped UK sentiment today after the energy giant won a legal reprieve in a settlement related to the 2010 Mexico oil spill which could spare the oil company billions of dollars of extra costs. Shares in BP were up almost 2 percent on the open.

European retail sales helped pare losses which came in 0.4% better than expected. German 10-year bonds fell for a fourth day after the report which added to signs the European economy is healing. Unemployment claims from the US showed fewer Americans filed applications for unemployment benefits this week, indicating US employers were maintaining staff counts in the days leading up to the government shutdown.

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

Disclaimer
Spreadex provides an execution only service and the comments above do not constitute (or should not be construed as constituting) investment advice or recommendations, or a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any person placing trades based on their interpretations of the above comments does so entirely at their own risk.