Markets Overview: (Source: Bloomberg, FT, Reuters, DJ Newswires)

UK 100 called to open +5pts at 6465, with most Asian stocks holding on to gains (CN & HK closed) after the US government partially shutdown, even if off earlier highs, with Japan benefiting from macro data showing rising optimism among large manufacturers and the despite jobless rate, earnings and spending deteriorating and a sales tax hike a done deal (see as good news in terms of pushing both stimulus and reforms).

Australia just in the red on the back of disappointing official Chinese PMI Manufacturing (another slim improvement, like HSBC print yesterday), and weak South Korean inflation and trade data, despite an improvement in Aussie manufacturing, house prices and retail sales and the RBA leaving the base rate unchanged.

Overnight, the US failed to agree on a budget, which saw the country begin the process of shutting down non-essential services. Markets not in turmoil, given brinkmanship run-up, but the longer it goes unresolved (without a full or short-term solution) the closer it takes us to the 17 Oct debt ceiling (no money to pay bills including sovereign debt) which is an altogether different issue – debt default.

In focus today, aside from the continued negotiations on the US budget between the Senate and Congress, we have UK & Eurozone PMI Manufacturing data for September which is expected to show slight improvements, like Ireland already started things off positively (up for 4^th month in a row).

Thereafter German & Eurozone unemployment rates seen unchanged. In the afternoon, US PMI Manufacturing also seen making a small advance, but the ISM reading is seen ticking back from its strong level of August.

UK 100 off worst levels of 6430 before the US shutdown. Resistance at overnight highs 6490 just before the shutdown deadline passed. Index still in downtrend from 19 Sept. Extent of shutdown and brinkmanship over debt ceiling may cap upside.

In FX, USD down at worst levels in 8-months, trading with 79 level. US Budget failure the architect, but debt ceiling worries adding to the pot. Nobody wants/needs dollars to buy US Treasuries, because worried about debt ceiling being reached, debt not being paid and sovereign downgrades impacting prices of bonds.

GBP/USD benefiting from USD woes, breaking up above 1.62 to trade near 12-month highs. 2013 highs 1.62 helped by US woes closing in on major trendlines of both horizontal (18-months) and falling (4yr) resistance. EUR/USD up above 1.355, trading 8-month highs with US woes truing Italian political concerns. Gold catching a bid at $1335, with rising lows, although still with $1350 resistance to break

US Light Crude oil below $102 off both worst and best levels of last 24 hours, impacted by prospect of reduced US growth from shutdown. Brent Crude bounced up from $107.5 yesterday but after reaching $108.6 it has turned all the way back. Support to hold, or situation to calm in Middle East?

For any help you may require placing trades or in terms of market information, put a call in to our trading floor – all part of the service.