Market Overview

Market Primer: Monday, September 30: US Government Shutdown Looking More Likely

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US indices slipped in the early hours of Monday as no movement on the emergency spending bill prompted investors to brace for a government shutdown. With the midnight deadline fast approaching, a lack of progress between Democrats and Republicans has most expecting to see the Federal government shut down on October.

Republicans opposed to Obamacare are fighting to postpone the healthcare bill, but Democrats and the President himself have vowed not to delay it. The Senate is set to reconvene 10 hours before the midnight deadline, where they could make an eleventh hour decision and avoid a shutdown.

Top News

In other news around the markets:

  • Oil prices have fallen under pressure as the US and Iran move forward towards a diplomatic resolution to the dispute over Iran's nuclear program. On Friday, US President Barack Obama and Iranian President Hassan Rouhani spoke directly via telephone for the first time since 1979, adding to optimism that the two can rebuild the long standing conflicted relationship.
  • Silvio Berlusconi has made good on his threats to take down the government as he pulled his party's ministers from the already fragile coalition. Prime Minister Enrico Letta has called for a confidence vote on Wednesday, at which he is hoping that some members of Berlusconi's party will support the coalition and make it possible to carry on.
  • China's HSBC Purchasing Managers Index rose in September, but much less than the 51.2 that was reported in the preliminary reading. The final figure came in at a disappointing 50.2, just barely above the 50 point mark which indicates growth.
  • The news website Quartz reported that Twitter is planning to make its confidentially filed IPO public this week. The company is reportedly attempting to hold its IPO before Thanksgiving, on November 28.

Asian Markets

Asian markets were mostly down on Monday. Australia's ASX 200 was down 1.66 percent, the Hang Seng index was down 1.39 percent and Indonesia's JSX composite lost 1.55 percent. The Japanese NIKKEI had the largest losses and was down 2.06 percent.

European Markets

European markets were down across the board with Italian politics pushing the MIB down 1.96 percent. The UK's FTSE lost 0.86 percent and the eurozone STOXX 600 was down 0.82 percent. The German DAX and the French CAC 40 were down 1.10 percent and 1.15 percent respectively.

Commodities

Energy futures were hit hard by thawing relations between Iran and the US. Brent futures were down 0.84 percent and WTI futures lost 1.11 percent. Metals were up across the board; gold gained 0.20 percent, silver gained 0.04 percent, copper was up 0.68 percent and aluminum gained 0.99 percent.

Currencies

The euro softened slightly against the dollar, but uncertainty over the US government shutdown weighed on the dollar. The pound was up against both the dollar and the euro, up 0.05 percent against the dollar and 0.20 percent against the euro. The yen gained 0.37 percent against the dollar.

Earnings Already Reported

Notable companies that reported earnings on Friday included:

  • BlackBerry (NASDAQ: BBBY) reported a loss of $0.47 per share on revenue of $1.60 billion, compared to last year's loss of $0.27 per share on revenue of $2.87 billion.
  • Vail Resorts, Inc. (NYSE: MTN) reported a loss of $1.67 on revenue of $112.31 million, compared to last year's loss of $1.50 on revenue of $113.54 million.

Pre-Market Movers

Stocks moving in the pre-market included:

  • Oracle Corp (NYSE: ORCL) gained 0.30 percent in pre-market trade after losing 0.79 percent over the past five days.
  • Chipotle Mexican Grill (NYSE: CMG) was up 0.24 percent in pre-market trade after news that CBRE Group would acquire Fameco, which Chipotle is a tenant for.
  • Bank of America Corporation (NYSE: BAC) lost 1.44 percent in pre-market trade, adding to its 3.74 percent loss over the past week.
  • Carnival Corp (NYSE: CCL) continued its losing streak and fell 1.25 percent in pre-market trade.
  • Wells Fargo & Co. (NYSE: WFC) lost 0.94 percent in pre-market trade after falling 2.94 percent over the past five days.

Earnings

Earnings reports expected on Monday include:

  • Park Electrochemical (NYSE: PKE) is expected to report EPS of $0.29 on revenue of $46.48 million, compared to last year's EPS of $0.28 on revenue of $46.43 million.
  • OMNOVA Solutions Inc. (NYSE: OMN) is expected to report EPS of $0.22 on revenue of $277.00 million, compared to last year's EPS of $0.16 on revenue of $288.20 million.

Economics

On Monday, most will be focusing on the looming US government shutdown. Other notable economic releases include Canadian GDP, British mortgage lending and mortgage approvals, Norwegian core retail sales and Italian and French PPI.

Happy trading!

For a recap of Friday's market action, click here

Tune into Benzinga's pre-market info show with Dennis Dick and Joel Elconin here.

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