Market Update 03/10/13

One line- Positive services data in China leads to general risk on moves in the market while the shutdown weighs on US stocks and the dollar.

- US stocks fell yesterday as investors contemplate the length and effect of the ongoing government shutdown. In addition to this a report showed that fewer workers were added in September than projected. The Dow sold off 0.39%. http://www.bloomberg.com/news/2013-10-02/u-s-stock-index-futures-fall-on-second-day-of-shutdown.html

- A measure of China's services industry breached a six month high yesterday extending the rally for Asian stocks. The good news was not enough to reverse the Nikkei's downward slide though the index only lost 0.09%. http://www.bloomberg.com/news/2013-10-03/asian-stocks-rise-as-investors-watch-u-s-shutdown-talks.html

- Emerging market currencies gained on the positive Chinese services data along with European stocks earlier this morning. Copper gained on the news while gold took a pause after rallying 2.2% yesterday. http://www.bloomberg.com/news/2013-10-02/australian-futures-rise-while-yen-holds-gains-oil-slips.html

- The dollar hit an 8 month low as the ongoing shutdown weighs on the currency. As the shutdown continues the likelihood of tapering in the near future reduces and so yields and the dollar have fallen. http://www.reuters.com/article/2013/10/03/us-markets-global-idUSBRE96S00E20131003

- Berlusconi back tracked on threats to destabilize the Italian government, while the Prime Minister Enrico Letta won a vote of confidence in parliament yesterday. http://uk.reuters.com/article/2013/10/02/us-italy-politics-idUKBRE9910A520131002

Data

S&P 1693.87 0.07%
FTSE 6448.93  0.18%
Nikkei 14,157.25 0.09%

EUR/USD- 1.3612 0.24%
USD/JPY- 97.83 0.48%
GBP/USD- 1.6225 0.01%

Gold- 1312.89 0.24%
Oil (Brent)- 109.10 0.08%

Copper- 331.80 0.06%

10 year yields

US- 2.65 (+3bps)
UK- 2.74 (+3bps)
Japan- 0.64 (0bps)