Market update: Wall Street firmer despite US shutdown – 02.10.2013

Source: Henderson Global Investors

Wall Street ended Tuesday’s trading session firmer (S&P 500 +0.8%, Dow Jones +0.4%). Many analysts expected that most investors have already priced in to markets the US government partial shutdown. There are also expectations that the Federal Reserve will postpone the withdrawal of its stimulus programme for now. Manufacturing surveys were mixed with a strong rise in the Institute for Supply Management’s purchasing managers´ index (PMI) for September; the gauge rose to 56.2 compared with economists’ forecasts for a reading of 55. However, the equivalent survey by Markit fell slightly to 52.8, missing forecasts for a stronger 53.1. A reading above 50 signals expansion in the sector.

Overnight, Japanese stocks weakened (Nikkei -2.2%). Yen strength is hurting exporters, while investors are said to be disappointed by an absence of detail concerning prime minister Shinzo Abe’s ¥5 trillion stimulus programme, which aims to counteract the impact of the recently announced sales tax rise.

European stocks are down this morning (FTSE Eurofirst 300 -0.8%, FTSE 100 -0.9%). Lingering political turmoil in Italy is limiting the upside in its stock market. On the FTSE 100, Tesco’s shares are weaker following a poor quarterly trading update; its European sales came in worse than expected and may prompt a significant full-year profit downgrade.