US Stock Futures Point To Lower Open Amid Prolonged Government Shutdown, Debt Ceiling Worries

 @AmruthaGayathri on October 03 2013 7:03 AM

U.S. stock index futures suggest a lower opening to markets on Thursday, as a tug of war between the Senate and the House continued over a federal spending bill, with no end in sight to the partial government shutdown, which began on Oct. 1, and as financial markets grow anxious over a looming deadline on Oct.17 to raise the debt ceiling. Investors are also waiting for a report on initial jobless claims scheduled to be released on Thursday.

Futures on the Dow Jones Industrial Average were down 0.25 percent, futures on the Standard & Poor's 500 Index were down 0.28 percent and those on the Nasdaq 100 Index were down 0.17 percent.

“Traders are hoping to hear of some political compromise before the week comes to an end but as of now, are not discounting the possibility of the shutdown running into next week. On top of that, the looming debt ceiling debate also has the market on edge,” Ishaq Siddiqi, a market strategist at ETX Capital, was quoted as saying by Market Watch. “The fact that U.S. lawmakers are tied in a game of political brinkmanship over a fresh budget leaves traders not feeling too confident that lawmakers will be able to find common ground on raising the debt ceiling. Indeed, failure to do so could see a U.S. default.”

The September jobs report, which is scheduled to be made public on Friday, may not be released due to the shutdown. However, initial jobless claims data, complied by individual states, is expected to come out as scheduled on Thursday, and the number of individuals who filed for unemployment insurance for the first time is projected to rise to 313,000 in the week ended on Sept. 28 from 305,000 in the week ended on Sept. 21. Traders will also be keeping an eye on the ISM non-manufacturing index and factory orders data.

In Europe, markets traded mixed on Thursday, despite service output data from the euro zone and the 28-member EU indicating that the region is on track for a steady recovery from a long recession. The Stoxx Europe 600 index was flat, while London’s FTSE 100 was up 0.20 percent, Germany's DAX-30 was down 0.1 percent and France's CAC-40 was down 0.38 percent.

The final reading of euro zone’s composite output purchasing managers’ index, or PMI, published by Markit based on surveys of manufacturing and service sector, rose to a 27-month high of 52.2 in September, up from 51.5 in August and above an earlier flash estimate of 52.1. Service sector PMI also rose to a 27-month high of 52.2 in September, up from 50.7 in August, and was above a preliminary estimate of 52.1. 

The UK’s service PMI, published by CIPS and Markit, recorded a level of 60.3, marginally lower than seven-year high of 60.5 registered in August, rounding off the third quarter with the sector’s best quarterly performance since 1997.

Meanwhile, the volume of August retail sales in euro zone was up 0.7 percent, on a monthly basis, while in the 28-member European Union, or EU, retail trade rose by 0.4 percent, data released by Eurostat showed.

In Asia, markets were trading mixed on Thursday, after China's official PMI in September rose to 55.4 from 53.9 in August, to show an expansion in non-manufacturing activities. 

Japan’s Nikkei ended down 0.09 percent while Australia’s S&P/ASX 200 gained 0.37 percent and Hong Kong’s Hang Seng Index gained 1 percent. China’s Shanghai Composite index and markets in South Korea were closed for holiday. India's BSE Sensex rallied to gain 1.97 percent.

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