Market movers today
In the US focus will be on the negotiations about temporary government funding for the new budget year starting tomorrow. It appears that negotiations will go down the wire and the risk of a partial government shutdown from tomorrow is substantial. If an agreement is reached, it will be after market close in Europe.
Europe focus will be on the political developments in Italy, but no clarification is expected until Wednesday when the government might face a non-confidence vote in parliament.
Scandinavia focus will be on Norway, where retail sales and the credit indicator will be released. For more on Scandi markets see page 2.
Selected market news
In the US the risk of a partial federal government shutdown is increasingafter the Congress, during the weekend, failed to move closer to an agreement on temporary funding for the new budget-year starting tomorrow, see Wall Street Journal. The House during the weekend approved a bill that extends funding until 15 December but delays implementation of Obama’s healthcare plan with one year and repels a planned increase in taxes on medical devices. The Senate later today is expected to approve its own version of the bill that will exclude both the delay of Obama’s healthcare plan, and the abolishment of the increase in taxes on medical devices. From here there appears to be little room for compromise ahead of the deadline at midnight. One option is that the Senate version is put to a vote in the House and gets approved with some support from Republicans. Another option appears to be to extend funding with a couple of days to allow more time for negotiations.
In Italy political uncertainty has also intensified after Berlusconi’s People of Freedom Party (PFP) withdrew its five ministers from the government this weekend, see Financial Times. Prime Minister Letta has indicated that he will ask the parliament for a vote of confidence in the government on Wednesday and it is possible that the government will be able to survive as many PFP members have expressed disaffection with Berlusconi’s move during the weekend
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In China the final estimate for the HSBC manufacturing PMI in September was revised markedly lower to 50.2 from 51.2 in the preliminary flash estimate, see Bloomberg. The HSBC manufacturing PMI now only shows a marginal improvement from 50.1 in August. This is an unusually large downward revision, which suggests that late responders have been substantially less positive than early responders, putting into question the strength of the Chinese recovery.
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