While news commentators consider what services will be affected by the first government shutdown in 17 years, European markets have decided to ignore the finger pointing across the Atlantic and concentrate on home affairs, with benchmarks moving higher aided by a surprise reduction in the zone’s Unemployment rate.
The lift in equities is further evidence of the lack confidence in the US political system, to the extent that the inevitable shutdown was seemingly factored in by Monday’s declines, as well as the continued pressure that the current stand-off has on the Fed to remain accommodative, and maintain that all important back stop to equity markets.
The more important point centres around the long term picture, with Goldman Sachs predicting that a three week shutdown could strip as much as 0.9% from US GDP this quarter, and while many predict this will not extend beyond a few days, the impact is certainly magnified further for every day a deal is not done.
One other area of concern is M/A and IPO activity, although big book deals like Twitter make the headlines, the $5 billion and under market is the “bread and butter” of the industry and these deals just aren’t happening. The lack of political confidence in the US and the knock on effect that has on the all-important debt ceiling talks does little to aid any revival in these deals.
Kentz corp see their stock offered higher in early trade following the announcement of a new contract to offer Instrumentation and Electrical support services to Bantrel Co in Canada.
It is Kentz’s first contract with Bantrel and “recognises Kentz’s reputation for world class completions and commissioning services.
Wolseley is up over 2% in early trade as investors welcomed news of the return of £300 million to investors after an 11% hike in full year profits. The firm have benefited from the revival of the UK housing market with the introduction of recent Government lending scheme as well as strong growth in their US business.
Further signs of a housing revival are apparent from St Modwen properties, who this morning reported the firm is benefiting from ongoing strengthening in the housing market, also indicating that there is room for optimism in regional markets outside of London as well.
The firm is behind the £150m Great Homer Street development in Liverpool.
Unilever sits at the foot of the FTSE this morning following a profit warning last night, blaming collapsing currencies In many emerging markets for their poor results.
The firm warned of a £417 million shortfall in sales this quarter, as consumers in India and Brazil swerve luxury imports from magnum ice cream to Dove soap for cheaper domestic alternatives as their currencies are hammered on the anticipation of Fed tapering later this year. India and Brazil are historically two of Unilever’s biggest growth markets.
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