Friday Morning Cheat Sheet: 3 Stories Moving Markets

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Major markets were mixed in Asia on Friday. In Japan, the Nikkei fell 0.26 percent to 14,760.07, and the yen strengthened to 98.515 against the dollar as the government there gears up to make an announcement about a tax plan and an economic growth strategy next week. In Hong Kong, the Hang Seng climbed 0.35 percent to 23,207.04, and in Shanghai, the Composite climbed 0.2 percent to 2,160.03. In India, the Mumbai Sensex fell 0.84 percent to 18,929.27. In Australia, the ASX All Ordinaries gained 0.27 percent to 5,302.30.

European markets declined in midday trading. In the U.K., the FTSE 100 was off 0.78 percent; in Germany, the DAX was off 0.13 percent; in France, the CAC 40 was off 0.26 percent; and the Euronext 100 index was off 0.36 percent. The euro strengthened to 0.7383 against the dollar.

U.S. equities closed Thursday up for the day but slid in premarket trading. At about 8:30 a.m., Dow futures were off 0.3 percent, S&P 500 futures were off 0.41 percent, and Nasdaq futures were off 0.37 percent.

Here are three stories to keep an eye on.

1. U.S. Budget DebateShutdown

The budget debate in the United States rages on with just a handful of days left until the October 1 deadline. The U.S. Senate is expected to vote on a short-term funding plan on Friday that was passed by the House of Representatives, although the Democrat-ruled majority is also expected to strip a measure from the bill that would defund the Affordable Care Act. The Senate will begin voting just after noon.

At issue is GOP opposition to President Obama’s health care law. Online exchanges are scheduled to begin opening on October 1, and the government just released state-level data on premiums. If House Republicans stick to their guns and reattach a defunding measure to the budget, the Senate won’t have an opportunity to get to it until Monday, just one day before the deadline for the budget. If neither side can compromise, the government faces a shutdown.

A survey recently conducted by Pew Research shows that Americans are split over whether they think policymakers will manage to reach an agreement. In total, just 46 percent think they will and 45 percent think they won’t, with the rest unsure. However, 61 percent of those surveyed think that a shutdown would have a major effect on the economy, and 75 percent expect that effect to be negative.

2. European Economic Sentiment

The European Commission reported on Friday morning that its Economic Sentiment Indicator increased by 1.6 points in the euro area to 96.9 and by 2.4 points in the European Union to 100.6. These readings compare to the long-run average of 100. The September reading put the EU indicator above its long-term average for the first time since July 2011.

Speaking in Brussels on September 13, Mario Draghi, president of the European Central Bank, described economic conditions in the region: “Following six quarters of negative output growth, euro area real GDP rose by 0.3 percent, quarter on quarter, in the second quarter of 2013. Measures of confidence and surveys of production have given some support to the view that euro area economic activity should continue its slow recovery in the current quarter, despite weak production data for July.

“Looking forward, economic activity should benefit from a gradual improvement in domestic demand, supported by the ECB’s accommodative monetary policy stance and strengthening external demand for euro area exports. However, unemployment in the euro area remains far too high, and the recovery will need to be firmly established.”

European Commission

Source: European Commission

3. Enrollment in Food Stamps Program at Record High

Earlier in September, the U.S. House of Representatives voted to advance a measure that would cut $4 billion, or 5 percent, from the food stamps programs each year for 10 years. The cost-cutting measure comes as the U.S. faces yet another round of debates over the fiscal budget and debt ceiling.

The cost of the Supplemental Nutrition Assistance Program, or SNAP, has more than doubled since 2008 to $78 billion, raising red flags for many members of the GOP who have been looking for ways to cut federal spending in the wake of the recession.

SNAP, managed by the U.S. Department of Agriculture, provided assistance to 44.7 million people in fiscal 2011 — nearly one in seven Americans — each receiving an average of $134 per month. The percentage of Americans receiving food stamps is roughly the same as the number of Americans in poverty, but the USDA suggests that if food stamp benefits were included in stated income, as many as 3.9 million people would be lifted above the poverty threshold.

Here’s a look at three states with particularly high rates of participation in the SNAP program… (Read more.)

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