The US government has shown no signs of progress in reaching an
agreement that will restart Federal operations, adding to worries
that the two sides will remain at odds through the October 17
deadline to raise the country's borrowing limit.
House Speaker John Boehner has said he will work to avoid
defaulting, however he also insisted that budget cuts would be a
condition for raising the debt ceiling.
Obama and the Democratic Senate have been adamant about refusing
terms to raise the country's borrowing limit. The stalemate has
sent the dollar tumbling and had a negative effect on stock markets
as investors sell shares as a precaution.
In other news around the markets:
Angela Merkel continued her talks with the Social Democrats over
the weekend as she attempted to form a grand coalition. Although
the party has been hesitant to partner with Merkel, its chairman
told German newspapers that they would give up their push for tax
increases if Merkel is able to find another revenue source. The
Green party is also emerging as a possible coalition partner since
a new, more centrist leader is expected to take over on Tuesday.
The BBC reported that Conservative leader Adam Afriyie has been
speaking out about moving forward a UK referendum on its EU
membership. Prime Minister David Cameron promised to hold a vote on
membership in 2017 if he wins the general election, however Afriyie
has said he will push Cameron for an October 2014 vote. The
Canadian dollar felt a lift from news that the Malaysian energy
company Petronas is planning to spend $36 billion on a new
liquefied natural gas plant and pipeline in Canada. The World Bank
revised its economic growth forecast lower for China and East Asia
on Monday. The bank cited China's shift from relying on exports to
focusing on domestic demand as a major cause of the reduced
forecast. The report showed the region is expected to grow 7.1
percent this year, down from the 7.8 previously forecast. The bank
noted that the region will continue to spur the global economy as
its growth still significantly outpaces its Western peers.
Asian markets were lower on Monday. The Japanese NIKKEI lost
0.79 percent and the South Korean KOSPI lost 0.12 percent. The
Australian ASX 200 lost 0.90 percent and Indonesia's JSX composite
was down 0.14 percent.
Europe's markets were quiet on Monday morning with most indices
flat with little change. The UK's FTSE was up 0.08 percent and the
eurozone's STOXX 600 was unchanged. Italy's MIB recovered from last
week's political drama and gained 1.59 percent.
Energy futures slid lower on Monday; Brent futures lost 0.32
percent and WTI futures were down 0.47 percent. Gold increased by
0.30 percent as investors flocked to the commodity as a safe haven
and silver gained 0.15 percent. Industrial metals were up across
the board with tin posting the largest gains, up 5.49 percent.
The dollar began the week under pressure amid government
shutdown worries. The euro was steady about $1.35 and the pound
gained 0.13 percent against the dollar. The yen rose 0.35 percent
against the greenback.
No notable earnings were reported on Friday
Stocks moving in the pre-market included:
American International Group (NYSE:
) lost 1.41 percent in pre-market trade after gaining 1.39 percent
on Friday. Wells Fargo & Co (NYSE:
) lost 1.31 percent in pre-market trade as banks braced for the Q3
earnings season. International Business Machines Corp (NYSE:
) was down 1.20 percent in pre-market trade after announcing its
takeover of Xtify. United States Steel (NYSE:
) fell 1.16 percent in pre-market trade after gaining 5.19 percent
last week. Peabody Energy Corp (NYSE:
) was down 1.21 percent in pre-market trade after choppy trading
resulted in a 0.69 percent loss last week.
Earnings reports expected on Monday include:
Tower Group, Inc. (NASDAQ:
) is expected to report a second quarter loss of $0.57 on revenue
of $421.10 million, compared to last year's loss of $0.34 on
revenue of $417.61 million.
Monday's economic calendar will be a quiet one. Expected
economic releases include US consumer credit, eurozone investor
confidence, Australian business confidence and British house price
Happy trading and good luck!
For a recap of Friday's market action, click
Tune into Benzinga's pre-market info show with Dennis Dick and
(c) 2013 Benzinga.com. Benzinga does not provide investment
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