Market Update: More political woes for Italy – 30.09.2013

Source: Henderson Global Investors

Friday saw Wall Street closing lower (S&P -0.4%, Dow Jones -0.5%, Nasdaq -0.2%) as the US budget discussions continued in Washington. According to Treasury Secretary Jacob Lew, the government only has enough cash to see it through to 17 October. Financials such as Goldman Sachs, Wells Fargo, Bank of America and Citigroup were among the largest losers as investors fretted about the state of the economy. The latest release of the University of Michigan's consumer confidence gauge was slightly lower than expected as consumers were concerned about higher interest rates and slower economic growth ahead.

In Asia, Chinese stocks closed higher before the 1-7 October National Day holidays, with the Shanghai Composite gaining 0.7% today. The HSBC/Markit Purchasing Managers’ Index for the manufacturing sector posted a reading of 50.2 in September, the second consecutive month of expansion. Meanwhile, the Nikkei closed down 2.1% and the Hang Seng fell 1.3%.

European stocks are trading weaker this morning (FTSE Eurofirst 300 and FTSE 100 both -0.8% at the time of writing), led by weakness in Italian stocks. Former prime minister Silvio Berlusconi’s People of Freedom party (PDL) announced that all of its ministers are resigning, in a critical setback to the coalition government. This could lead to a call for new elections.