Dow Jones Hits A 1-Month Low

U.S. markets are being hit harder now as they continue to decline. The Dow has now hit a one month low and we will see more losses as the shutdown drags on. Asian markets tracked the U.S. markets lower this morning as well. We are seeing a global impact.

Investor fears are now growing that the impasse in Washington will result in the debt ceiling not being raised in time. Oct. 17 is the date on that. A mere 9 days away now. If the debt ceiling is not raised the U.S. will default on obligations, something it has never done before.

We are seeing an organized pullout from the U.S. equities markets at this time. Investors are certain a deal will get done but will position themselves accordingly, just in case.

We are now within the second week with no clear resolution and this is making investors leery as October 17 gets closer. On Sunday. Treasury Secretary Jack Lew warned Congress that they were “playing with fire.” He is adamant that the U.S. could default in just over a week if nothing is done.

This week, as the shutdown progresses, we will see disruptions to the flow of economic data. This means Q3 earnings will get extra attention and will drive the markets as investors will use that to gauge the U.S. economic recovery.

STOCKS
The DJIA lost over 136 points to hit a monthly low below the key 15,000 level. The Blue Chip Index closed at 14,936.24. The S&P 500 lost over 14 points to end at 1,676.12 and the Nasdaq Composite lost 37.38 points to finish at 3,770.38.

In Asia, markets were lower today as they tracked the U.S. fall. The Nikkei 225 fell again today and is now at its lowest point in over a month. The Japanese benchmark was at 13,806.69. The Australian benchmark lost 0.5 percent to end at 5,137.10 and the South Korean Kospi fell to 1,984.04.

China’s markets opened today after being closed for a national holiday that lasted a week. The Shanghai Composite was erratic and volatile but managed to close up 0.1 percent at 2,176.50. Hong Kong was also volatile and closed up 0.4 percent at 23,054.11.

CURRENCIES
The infighting in the U.S. is impacting the Forex markets.

The USD/JPY (96.937) dipped as the yen continues to strengthen. This comes after President Barack Obama said he will not negotiate with the Republicans over the debt limit. We were are above 96.900 but while below 97.00 we can test 96.00 at some point. The GBP/USD (1.6079) strengthened after data showed the UK manufacturing improved last quarter. We can next aim for 1.6100 and then 1.6140. Please see the below chart.

EUR/USD (1.3560) fell a tad overnight but has support at 1.3555 and then at 1.3550 which should hold and bring a recovery to 1.3570 and higher.

COMMODITIES
Let us look at the metals today.

Gold (1325.60) is near a week high as trader put capital in the yellow metal. Resistance us at this level and if it breaks we will aim for 1350 again. Silver (22.355) broke through 22.00 and is targeting 22.90.

Copper (3.3005) is trading in a range for now above the support at 3.2750. we are still bearish for 3.35 at this point.

TODAY’S OUTLOOK
Today we get some data like the NFIB small business optimism and international trade. We will also have a 3 year note auction and a number of area fed President speak.