Spreadex Market Analysis: Asian Markets Slide, US Futures Up

AM Analysis – “Obama puts pressure on House Republicans” – Lee Mumford
President Barack Obama put pressure on House Republicans to reopen the government and to raise the US debt ceiling during a conference last night. Obama said he would be willing to negotiate only after Republicans agree to reopen the government and raise the debt limit with no conditions. The negativity in the markets is likely to continue today as investors lose confidence that a deal will be reached before the mid-October deadline.

The majority of Asian markets slid on concern the US won’t come up with a plan before the deadline. Adding fuel to the fire, the International Monetary Fund cut its global growth outlook but lifted UK growth projections. The IMF expects global growth of 2.9% this year, a cut of 0.3% from July’s estimate. Despite the global negativity, Japanese shares managed to advance for a second day helped by a weaker Yen against the dollar. The dollar strengthened after a House official said Obama will nominate Janet Yellen to replace Ben Bernanke as chairman of the Federal Reserve, a move likely to continue the central banks loose monetary policy.

PM Analysis – “Janet Yellen to be named the next chief of the Federal Reserve” – Alex Conroy
Janet Yellen will today be named the next chief of the Federal Reserve and the first female chief ever. The announcement is expected today at 3pm and has already had an impact on the markets with US futures up on the day. This could provide a much needed glimmer of hope for the US market with the more dovish Yellen likely to be strongly in favour of not tapering until more conclusive evidence of a recovery can be established.


This positive outlook however could be for nought if a solution to the government shutdown and the debt ceiling can be agreed. With the 17th October debt ceiling deadline fast approaching and the possibility of a US default becoming increasingly likely short term Treasury yields have soared as people look to offload their positions.

UK markets had a down morning with investors reacting to poor manufacturing production results. Forecast at 0.3% month on month the result came in at -1.2%. This is likely to worry investors who have grown used to seeing positive economic data for the UK of late. This could plant the seed of doubt as to the authenticity of the UK recovery.

[The original articles by Spreadex can be found here.]

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