“We had a fairly large selloff in the last couple of days, so some of this was maybe already factored in,” said Richard Perry, chief market strategist at Central Markets in London. “If you take a step back and look at it, the U.S. missing the budget deadline may be a decent way in to the debt-ceiling talks. The lawmakers will hopefully be so embarrassed that they come up with a solution in better time. It’s a much bigger issue because of the risk of default,” he added. The Stoxx Europe 600 index XX:SXXP +0.77% added 0.8% to 312.86, recovering from a 0.6% loss on Monday. Click to Play Analysis: Markets react to shutdown Markets are currently up despite the government shutdown in Washington, however, trouble could be brewing if the stalemate continues. Photo: AP. Shares of Telecom Italia SpA IT:TIT +5.16% jumped 5.2% after Goldman Sachs reinstated coverage of the firm with a buy rating. “We believe the proposed changes to TI’s controlling shareholder structure may provide it an opportunity to delever its balance sheet, which could lead to a significant positive change in strategy,” Goldman Sachs said. Shares of Renault SA FR:RNO +1.65% added 1.7% after data showed new French car registrations for the auto maker jumped 18% in September. Japan tax and U.S. government shutdown Japanese stocks ended in positive territory after Prime Minister Shinzo Abe announced plans to increase the nation’s sales tax in efforts to help the country’s public finances and tackle the huge debt pile. U.S. stocks also rose on Wall Street, even as the lawmakers failed to agree on a budget for the new fiscal year before the deadline, prompting a partial closure of the government. The shutdown is the first since 1996 and will leave thousands of government workers furloughed and national parks closed. Other services, including the issuing of Social Security checks and the U.S. Mail, will continue. “It is not a wise idea for politicians to play with the fragile recovery,” said Naeem Aslam, chief market analyst at Ava Trade, in a note. Shutterstock Enlarge Image “The hope is that both Democrats and Republicans would come to their senses soon enough to see what the consequences could be on the markets by passing the temporary budget which could let the government run in the [meantime],” he added. The equity indexes on both sides of the Atlantic were also buoyed by a measure of manufacturing activity in the U.S. rising to the highest point in more than two years. Europe data Data confirmed that the euro zone’s manufacturing sector expanded for a third straight month in September, with the purchasing managers’ index in line with a preliminary estimate of 51.1, but lower than the 51.4 August print. A reading above 50 signals expansion. Eurostat said unemployment in the currency union edged lower for a third straight month in August, although not enough to affect the overall unemployment rate, which held steady at 12%. The July joblessness rate was revised lower after previously being reported at 12.1%, which means the 12% rate was the lowest since December 2012. Germany’s unemployment unexpectedly rose to 6.9% in September. “We see little momentum in the labor market picture at the aggregate level. This reflects our view that although a recovery in the euro area is well under way, it will take time for the rebound in sentiment to feed through to actual hiring decisions,” said Timo del Carpio, European economist at RBC Capital Markets, in a note. Most country-specific indexes, however, ignored the downbeat assessment and moved higher. France’s CAC 40 index FR:PX1 +1.28% rose 1.3% to 4,196.60, while Germany’s DAX 30 index DX:DAX +1.10% gained 1.1% to 8,689.14. Banks posted some of the biggest gains in the benchmarks, with shares of Commerzbank AG DE:CBK +3.93% up 3.2% in Frankfurt and Société Générale SA FR:GLE +2.77% 2.8% higher in Paris. The U.K.’s FTSE 100 index UK:UKX -0.03% closed slightly lower at 6,460.01. Shares of Unilever PLC UK:ULVR -3.36% UL +0.65% fell 3.4%, after the consumer-products giant downgraded its sales-growth expectations for the third quarter due to a slowdown in emerging markets. Italy’s FTSE MIB index XX:FTSEMIB +3.11% jumped 3.1% to 17,977.06, bouncing back after a 1.2% loss on Monday, as political tensions eased a bit ahead of a confidence vote on Wednesday. Prime Minister Enrico Letta scheduled the vote to avoid a snap election and seek backing from parliament after Silvio Berlusconi over the weekend decided to withdraw all of his People of Freedom party’s ministers from the government. Media reports said Monday afternoon that Berlusconi faced dissent within his own party ahead of the vote, which could halt his plans to bring down the government.
Posted on: Wed, 02 Oct 2013 03:57:03 +0000
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