The Republican-led House and Democratic-led Senate failed to
come to an agreement on Tuesday evening, leaving the US government
no choice but to shut down for an undetermined period.
However, most are expecting the shutdown to be short lived and
markets responded calmly with the dollar maintaining much of its
strength and the S&P 500 up 0.2 percent.
In other news around the markets:
Japanese Prime Minister Shinzo Abe has decided to go ahead with his
government's planned sales tax increase which will take the tax
from 5 percent to 8 percent in April. This will be Japan's first
hike since 1997 and will come along side a stimulus package
expected to be worth 5 trillion yen. Silvio Berlusconi could face
some obstacles as he tries to topple Italy's coalition government.
Although Berlusconi has called for all of his People of Freedom
Party Ministers to resign, Reuters reported that some members of
the party are planning to back Prime Minister Enrico Letta at a
confidence vote on Wednesday. Israeli Prime Minister Benjamin
Netanyahu has called for stronger sanctions on Iran despite recent
progress towards resolving the dispute over the nation's nuclear
program. Netanyahu has called for Iran to completely dismantle its
nuclear facilities, while the US has taken a softer stance saying
Iran can maintain its uranium enrichment program if it is subject
to inspection to verify it is being used for peaceful purposes. As
expected, the Reserve Bank of Australia decided to keep its
interest rates unchanged at 2.5 percent on Tuesday. The bank said
the benefits of its earlier cuts were still trickling through the
economy and that the full effects of the cuts wouldn't be seen "for
a while". The bank also said the economy is likely to continue
growing at a below average pace as the country adjusts to the lack
of mining investment.
Asian markets gained on Tuesday; the Japanese NIKKEI was up 0.20
percent, China's Shanghai composite was up 0.68 percent and the
Shenzhen composite was up 0.91 percent. Hong Kong's Hang Seng index
suffered a 1.50 percent loss.
European markets were up across the board, except the UK's FTSE
which was down 0.21 percent. The eurozone's STOXX 600 gained 0.33
percent and the Spanish IBEX was up 0.72 percent. Italy's MIB had
the largest gains, up 0.97 percent.
Energy futures were down across the board, Brent futures fell
0.35 percent and WTI futures were down 0.19 percent. Gold and
silver gained 0.35 percent and 0.33 percent respectively, and
industrial metals were also higher with zinc posting the largest
gains, up 0.58 percent.
With the US government shut down, the dollar was under some
pressure however there wasn't a great deal of movement. The euro
gained 0.13 percent on the dollar and the yen was up 0.40 percent
against the dollar. The pound was up 0.33 percent against the
Notable companies that reported earnings on Monday included:
Park Electrochemical Corporation (NYSE:
) reported EPS of $0.29 on revenue of $45.00 million, compared to
last year's EPS of $0.28 on revenue of $46.43 million. OMNOVA
Solutions Inc. (NYSE:
) reported EPS of $0.19 on revenue of $261.20 million, compared to
last year's EPS of $0.16 on revenue of $288.20 million.
Stocks moving in the pre-market included:
H & R Block Inc (NYSE:
) was up 1.13 percent in pre-market trade after losing 0.93 percent
in choppy trading over the past 5 days. J C Penney Company (NYSE:
) gained 1.08 percent in pre-market trade after losing more than 28
percent in the past week. Nike Inc (NYSE:
) continued on a high after releasing a better than expected
earnings report and gained 0.69 percent in pre-market trade.
Citigroup Inc. (NYSE:
) lost 1.05 percent in pre-market trade as the company struggled
through a legal battle for selling risky debts through misleading
statements. Home Depot (NYSE:
) lost 0.73 percent in pre-market trade after falling 0.14 percent
Earnings Reports Expected On Tuesday Include:
Walgreen Co. (NYSE:
) is expected to report EPS of $0.72 on revenue of $17.95 billion,
compared to last year's EPS of $0.63 on revenue of $10.07 billion.
Actuant Corporation (NYSE:
) is expected to report EPS of $0.76 on revenue of $1.71 billion,
compared to last year's EPS of $0.86 on revenue of $1.77 billion.
Sonic Automotive, Inc. (NYSE:
) is expected to report EPS of $0.50 on revenue of $2.27 billion,
compared to last year's EPS of $0.40 on revenue of $2.15 billion.
On Tuesday, most US economic data is expected to be released
despite the government's shutdown. US data due out includes
construction spending and the ISM manufacturing index. Other
notable economic releases from around the world include eurozone
unemployment and manufacturing PMI, South Korean CPI, Italian,
French, German and Spanish manufacturing PMI and Germany's
Good luck with your trades!
For a recap of Monday'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
advice. All rights reserved.
Free Trading Education -
Check out the free events taking place on Marketfy
this week. Spaces are limited. Sign up today.