Market Update 30/09/13

One line- Risk off moves on US budget concern with global stocks tumbling while gold, Treasuries and the yen rallied.

- Asian stocks fell overnight with the Nikkei selling off 2.06% as Congress failed to reach an agreement over the US budget. Congress now has just one day to prevent a government shutdown which is calculated to slow US GDP growth 0.1% for every day it is in effect. http://www.bloomberg.com/news/2013-09-30/asian-stocks-fall-paring-monthly-gain-over-u-s-budget.html

- European stocks opened down this morning as the market made risk off moves on US budget concern. The Republican controlled House of Representatives voted yesterday in support of a bill which ties a delay in central provisions of Obama's health care bill to an extension of government funding. If the Senate rejects the bill today the government will shutdown. http://www.bloomberg.com/news/2013-09-30/european-stock-index-futures-drop-as-u-s-shutdown-looms.html

- Gold advanced to the highest level in more than a week as demand for safe haven assets was boosted. Bullion gained 1.3% on the recent US budget news. http://www.bloomberg.com/news/2013-09-30/gold-climbs-as-prospect-of-u-s-government-shutdown-spurs-demand.html

- Italian yields jumped as Berlusconi pulled his ministers from a 5 month grand coalition as he tried for new elections. Enrico Letta the Italian prime minister spoke yesterday with Giorgio Napolitano, the head of state, as both look to avoid dissolving parliament and calling new elections. Letta is expected to present a plan for government and have a vote of confidence on Wednesday. http://www.ft.com/cms/s/0/7b12685c-2927-11e3-ab62-00144feab7de.html#axzz2gMap02d2

- Treasury yields fell to a 7 week low as investors shifted preferences to safe haven assets. The dollar fell to a one month low vs the yen while the pound gained also.http://www.bloomberg.com/news/2013-09-30/treasury-yields-drop-to-7-week-low-as-shutdown-fuels-safety-bid.html  http://www.bloomberg.com/news/2013-09-29/dollar-extends-drop-against-yen-with-government-shutdown-looming.html

Data

S&P 1691.75 0.41%
FTSE 6467.99  0.69%
Nikkei 14,455.80 2.06%

EUR/USD- 1.3499 0.17%
USD/JPY- 97.81 0.44%
GBP/USD- 1.6156 0.11%

Gold- 1340.95 0.30%
Oil (Brent)- 107.78 0.78%

Copper- 333.25 0.09%

10 year yields
US- 2.61 (-1bps)
UK- 2.69 (-1bps)
Japan- 0.68 (+1bps)