World markets advance as US government partially closes down
"I read that the very representatives who cannot find a compromise and therefore caused this mess did find common ground and voted to ensure their pay would not be affected by this partial shutdown"Featured comment
World financial markets have shrugged off the partial closedown of US federal agencies due to a budget impasse.
Non-essential government services, ranging from tourist attractions to the issuing of passports, are not being performed.
But airports, border control, law enforcement and emergency services are still working.
While the threat of the first shutdown in 17 years contributed to falls on Wall Street for seven over the past eight sessions, the actual event hasn’t carried that through.
Stocks in fact rose, with the Dow Jones Industrial Average rising 60 points to 15,190 in early afternoon trading before slipping back to 15,156 (8am, NZ time), helped by a strong reading on manufacturing activity.
Global stocks also showed resilience; markets in Europe and Asia the markets had been anticipating the political gridlock, which has caused 129-point slide in the Dow on Monday.
US legislators failed to reach agreement to keep the government fully funded to start the new fiscal year as Senate Democrats and House Republicans remained at loggerheads over government spending and the launch of the Affordable Care Act (“Obamacare”).
The partial government shutdown isn't expected to last long, although there is uncertainty over what it might mean for the economy. This is compounded by worries about protracted political dysfunction ahead of talks to raise the debt ceiling over the next few weeks.
Meanwhile, US manufacturing activity in September unexpectedly picked up, according to data released by the Institute for Supply Management.
But the shutdown will affect the release of government economic data. The Commerce Department was scheduled to release of construction-spending data for August.
European markets were mostly higher as data showed mild economic improvement. The euro zone's August unemployment rate of 12% came in slightly below expectations of 12.1%.
Asian markets were little changed. Japan's Nikkei Stock Average rose 0.2% after the Bank of Japan's tankan survey showed business sentiment improved for a third-straight quarter, with the key diffusion index rising more than expected.
Oil futures in New York fell to a three-month low of $US101.27 a barrel while gold fell below $US1300 an ounce to $US1297, the lowest in two months.