US Stock Futures Point To Lower Open As Investors Turn Skeptical Of A Short-Term Solution To US Policy Crises

  on October 17 2013 6:59 AM
Nasdaq
A security officer stands guard outside the Nasdaq MarketSite in New York's Times Square on Aug. 23, 2013. Reuters/Andrew Kelly

U.S. stock index futures suggest a subdued opening to markets on Thursday, despite Congress having averted an economic crisis by ending the government shutdown and raising the debt ceiling limit, as concerns took hold over lawmakers' failure to come up with a long-term solution to the crises, which kept global markets on edge over the past few days.

Futures on the Dow Jones Industrial Average were down 0.28 percent, while futures on the Standard & Poor's 500 Index were down 0.12 percent and those on the Nasdaq 100 Index were flat.

The bill that allows for sequester cuts to continue was passed by the Senate and the House late on Wednesday, and President Barack Obama signed the bill into law shortly after midnight. The bill would finance the U.S. government until Jan. 15, while the lawmakers also agreed to raise the federal borrowing limit until Feb.7.

“We’ll begin reopening our government immediately, and we can begin to lift this cloud of uncertainty and unease from our businesses and from the American people,” Obama said after signing the bill, MarketWatch reported.

Although Congress’ efforts toward averting the crises brought relief to the markets and stocks ended higher on Wednesday, investors did not appear much enthused by the stop-gap arrangement.

“In terms of work to do, the budget needs to be re-negotiated within two months, the government will be re-opened and funded for just three months and the debt-ceiling issue pushed back for four months. The muted market reaction... suggests them already pricing in a standoff re-run in Dec., Jan. and Feb.,” Mike van Dulken, head of research at Accendo Markets, wrote in a note, MarketWatch reported.

Meanwhile, the initial jobless claims report, which measures the number of individuals who filed for unemployment insurance for the first time last week, is scheduled to be released by the Department of Labor at 8:30 a.m. EDT. Economists predict that claims are likely to decrease to 335,000 for the week ended Oct.12, down from 375,000 in the previous week.

And, economists expect continuing jobless claims data, which measure the number of unemployed individuals who qualify for benefits under unemployment insurance, to show a marginal increase to 2.915 million from the 2.905 million recorded in the previous week.

In Europe, markets traded lower on Thursday following U.S. lawmakers' failure to provide a better solution to end the nation’s fiscal policy crises. The Stoxx Europe 600 index was flat, London’s FTSE 100 down 0.09 percent, Germany's DAX-30 was down 0.48 percent and France's CAC-40 was trading down 0.33 percent.  

In Asia, markets were mixed with Japan’s Nikkei ending up 0.83 percent while Australia’s S&P/ASX 200 gained 0.38 percent. In China, the Shanghai Composite index ended down 0.21 percent while Hong Kong’s Hang Seng Index dropped 0.58 percent. South Korea’s KOSPI Composite index added 0.30 percent and India’s BSE Sensex ended the day down 0.64 percent.

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