Monday Morning Cheat Sheet: 3 Stories Moving Markets

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Major equity markets mostly declined around the world on Monday as the United States entered the second week of a partial government shutdown and exporters with high exposure to the U.S. faced selling pressure. In Japan, the Nikkei fell 1.22 percent to 13,853.32, its lowest level in a month, while the yen continued to strengthen, trading at 96.935 against the U.S. dollar. In Hong Kong, the Hang Seng fell 0.72 percent to 22,971.32, and in Shanghai, the Composite gained 0.68 percent to 2,174.66. In India, the Mumbai Sensex fell 0.1 percent to 19,895.10. In Australia, the S&P ASX All Ordinaries fell 0.87 percent to 5,160.60.

European markets declined in midday trading. In the U.K., the FTSE 100 was off 0.81 percent; in Germany, the DAX was off 0.93 percent; in France, the CAC 40 was off 0.75 percent; and the Euronext 100 index was off 0.81 percent. The euro strengthened to 0.7369 against the dollar.

U.S. equities also declined in pre-market trading. At 8:35 a.m., Dow futures were off 0.79 percent, S&P 500 futures were off 0.86 percent, and Nasdaq futures were off 0.73 percent.

Here are three stories to keep an eye on.

1. U.S. Government Shutdown

With no agreement on a continuing resolution within sight, the U.S. government continues to stumble through a partial shutdown. President Obama and the Democratic Party continue to insist that Congress pass a clean continuing resolution that would turn the lights back on with no strings attached, while Speaker of the House John Boehner (R-Ohio) and much of the GOP insist that Democrats cede changes to the Affordable Care Act.

While the damage caused by the shutdown grows each day, the looming disaster on the horizon remains the debt ceiling. Speaking on ABC’s “This Week,” Boehner said: “We’re not going to pass a clean debt limit increase. … The votes are not in the House to pass a clean debt limit.”

2. European Gross Domestic Product

GDP increased by 0.3 percent in both the euro area 17 and the European Union 27 during the second quarter of 2013, according to Eurostat. This is the agency’s final, revised estimate for the quarter, and it is little changed from the previous estimate. Year over year growth in the EA17 was revised down slightly to -0.6 percent from -0.5 percent. Eurostat estimates that U.S. GDP grew by 0.6 percent in the second quarter.

Speaking after a policy meeting earlier in October, European Central Bank President Mario Draghi said: “Inflation expectations for the euro area continue to be firmly anchored in line with our aim of maintaining inflation rates below, but close to, 2 percent over the medium term. At the same time, real GDP growth in the second quarter was positive after six quarters of negative output growth, and confidence indicators up to September confirm the expected gradual improvement in economic activity from low levels.”


Source: Eurostat

3. In the Polls: Republican Popularity Falls as Blame Rises

Sen. Ted Cruz (R-Texas) has been named the chief strategist behind the government shutdown, with Obamacare and the spending bill at its heart. It’s therefore more than understandable that Cruz might be defensive when faced with discord and dissatisfaction within his own party. Just two days ago, a Republican senator described the attack of fellow Republicans on Cruz — according to The Huffington Post – saying, “It just started a lynch mob.”

Cruz insists that by rallying fellow Tea Party members and Republicans into the present situation, he had not damaged his party — “Not remotely,” said Cruz. “I also think far too many people are worried about politics,” he said to The Huffington Post, discussing the shutdown, referring to “nasty partisan jabs from Democrats.”

Though Cruz believes his efforts haven’t left the Republican Party with a black eye, the numbers don’t stand behind Cruz’s claims. Based on recent polls, the shutdown is not treating the Republican Party well in terms of public opinion… (Read more.)

Don’t Miss: U.S. Debt Ceiling Looms Large: Boehner Stands Firm.