Democrats Brings In Sequester Cuts Issue To Fore In Debate Over Debt-Ceiling, Government Shutdown Impasse, Sending Stock Futures Down

   on October 14 2013 6:27 AM
Nasdaq
Construction crew work outside the Nasdaq MarketSite in New York's Times Square, Aug. 23, 2013. Reuters

U.S. stock index futures point to a significantly lower open on Wall Street on Monday, as the U.S. government shutdown enters its fourteenth day and the debt-ceiling deadline closes in, leaving investors anxious over the fate of the country's economy.

Futures on the Dow Jones Industrial Average were down 0.7 percent, while futures on the Standard & Poor's 500 Index were down 0.71 percent and those on the Nasdaq 100 Index were down 0.48 percent.

According to the latest media reports, the Democrat-led Senate and Republican–led House of Representatives are now sparring over a deal tying previously-approved budget cuts, popularly known as the sequester, to the current debt-ceiling proposal.

According to the reports, Republicans want to maintain sequestration-level spending cuts through March, which will result in another round of budget cuts to hit the economy on Jan. 15, while Democrats are against the idea and want to undo the across-the-board spending cuts.

“The ‘deal or no deal’ game being played in Washington, D.C., continues to wear down the markets,” and sentiment is “definitely bearish,” Vito Henjoto, a senior technical strategist at Invast Financial Services, wrote Sunday, MarketWatch reported.

In Europe, markets traded slightly lower on Monday even as industrial production data beat expectations while in Asia, most markets nursed losses while the region's largest and third-largest economies reported disappointing inflation data.

The Stoxx Europe 600 index was trading down 0.06 percent, London’s FTSE 100 was up 0.06 percent, Germany's DAX-30 was down 0.18 percent and France's CAC-40 was trading down 0.14 percent. 

Seasonally-adjusted industrial production grew by 1 percent in the 17-nation euro zone and by 0.5 percent in the 28-nation European Union, or EU, in August, compared to a fall of 1 percent and 0.6 percent respectively in July, Eurostat, the statistical office of the EU, reported on Monday.

China’s annualized consumer inflation in 2013 advanced by 3.1 percent in September, up from a 2.6 percent rise in August. India’s wholesale price inflation, or headline inflation, rose to 6.46 percent in September, up from 6.1 percent in the previous month, and against economists’ expectations of a 6 percent increase.

Australia’s S&P/ASX 200 lost 0.44 percent, South Korea’s KOSPI Composite index shed 0.23 percent, Taiwan’s Taiex traded down 0.9 percent and Singapore’s Straits Times Index dropped 0.46 percent. The Shanghai Composite index ended up 0.43 percent while India’s BSE Sensex trimmed earlier gains to end the day up 0.38 percent. 

Both Hong Kong’s Hang Seng Index and Japan’s Nikkei were closed on account of national holidays. 

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