Market Update 01/10/13

One line- Market weighs positive Japanese business confidence data against the US shutdown result rallying Asian and European stocks with gold while Treasuries and the dollar slid.

- US stocks finished down yesterday as the markets contemplated a US shutdown which was realized at midnight. The Senate voted 54 to 46 against a House funding bill that made changes to Obama's healthcare legislation. The shutdown will put as many as 800 000 in furlough. Asian stocks rallied from the biggest drop in six weeks as Japanese business confidence reached an almost six year high. The aussie dollar also rallied on positive retail sales data.  http://www.bloomberg.com/news/2013-09-30/u-s-futures-climb-as-shutdown-looms-while-oil-holds-drop.html

- European stocks advanced this morning reversing their biggest drop in a month and picking up the baton from Asian share gains. German data released this morning showed an unexpected increase in the unemployment rate to 6.9% http://www.bloomberg.com/news/2013-10-01/european-stock-index-futures-advance-amid-u-s-shutdown.html

- The dollar neared a 8 month low on the shutdown news while Treasuries ticked lower also. Gold climbed along with silver adding 0.6% and 1.2% respectively. http://www.reuters.com/article/2013/10/01/us-markets-global-idUSBRE96S00E20131001 http://www.bloomberg.com/news/2013-10-01/gold-holds-losses-as-partial-u-s-shutdown-looms-platinum-drops.html

- Shinzo Abe announced that he will authorize an increase the national sales tax from 5-8% on April 1st next year. The premier plans to give a speech outlining the reasons for the increase as well as stimulus plans to offset the short-term effect of the policy. http://www.ft.com/cms/s/0/960485b0-2a2f-11e3-bbb8-00144feab7de.html?siteedition=uk#axzz2gMap02d2

- The Brazilian real is headed for its biggest monthly gain in almost two years after the central bank raised its 2014 inflation forecast making it more likely the bank will engage in hawkish policy. The real has rallied 7.3% this month vs the dollar- the most since October 2011.  http://www.bloomberg.com/news/2013-09-30/brazil-real-heads-for-biggest-monthly-gain-in-almost-two-years.html

Data

S&P 1681.55 0.60%
FTSE 6456.24  0.09%
Nikkei 14,484.72 0.20%

EUR/USD- 1.3567 0.30%
USD/JPY- 98.03 0.24%
GBP/USD- 1.6239 0.33%

Gold- 1334.74 0.43%
Oil (Brent)- 108.09 0.26%

Copper- 333.30 0.30%

10 year yields
US- 2.65 (+4bps)
UK- 2.73 (+1bps)
Japan- 0.67 (-1bps)