Asian shares mostly up as investors await more Brexit polls

MANILA, Philippines— Asian shares were mostly higher Wednesday, with investors focused on Thursday’s vote on Britain’s possible withdrawal from the European Union and after relief over U.S. Federal Reserve Chair Janet Yellen’s statement that the Fed would remain cautious in raising interest rates.

KEEPING SCORE: Japan’s Nikkei 225 was down 1 percent to 16,002.60 while China’s Shanghai Composite Index was up 0.4 percent to 2,891.03. Hong Kong’s Hang Seng index was up 0.3 percent to 20,730.25. Australia’s S&P ASX 200 edged up 0.1 percent at to 5,281.60. South Korea’s KOSPI was up 0.4 percent at 1,990.07. Southeast Asian markets were mostly up.

ANALYST VIEWPOINT: “We still have three polls on UK referendum before the vote, and another shift back to ‘Brexit’ will see risk appetite disappear in a jiffy,” said Bernard Aw, IG market strategist, as the polls showed “remain” with a slight lead over “leave” sentiment. “Despite a positive performance in the overnight markets, Asia will continue to trade cautiously.”

WALL STREET: U.S. stocks rose Tuesday as investors were relieved to hear Federal Reserve Chair Janet Yellen say the Fed would remain cautious in raising interest rates. Stocks hardly budged for most of the day as investors were occupied by Yellen’s Congressional appearance and the looming vote on Britain’s possible withdrawal from the European Union. For the second day in a row, stocks traded higher and bond prices fell as investors felt a bit surer that Britain will stay in the EU. The Dow Jones industrial average picked up 24.86 points, or 0.1 percent, to 17,829.73. The Standard & Poor’s 500 index rose 5.65 points, or 0.3 percent, to 2,088.90. The Nasdaq composite added 6.55 points, or 0.1 percent, to 4,843.76.

OIL: Benchmark U.S. crude rose 19 cents to $50.04 a barrel in New York. On Tuesday, it fell 52 cents, or 1.1 percent, to $48.85 a barrel. Brent crude, the benchmark for international oil prices, was also up 15 cents to $50.77 a barrel in London. On Tuesday, it slipped 3 cents to $50.62 a barrel.

CURRENCIES: The dollar fell to 104.45 yen from 104.76 yen the previous day. The euro rose to $1.1271 from $1.1251 on Tuesday.

source: business.inquirer.net

Global stocks surge as investors welcome Fed assurance

MANILA, Philippines — Global stocks surged Wednesday as investors welcomed the latest signal from the U.S. Federal Reserve that it will move slowly to raise interest rates. Japan’s Nikkei 225 bucked the trend and closed lower.

KEEPING SCORE: Britain’s FTSE 100 rose 1.4 percent in early trading to 6,193.27. Germany’s DAX climbed 1.4 percent to 10,024.07, while France’s CAC 40 gained 1.4 percent to 4,429.74. U.S. futures augured a positive opening on Wall Street, with Dow futures up 0.5 percent to 17,628 and S&P futures rising 0.5 percent to 2,057.

ASIA’S DAY: Tokyo’s Nikkei 225 lost 1.3 percent, closing at 16,878.96, on the continuing strong yen and the trade ministry’s announcement of a 6.2 percent month-on-month drop in industrial production in February. Hong Kong’s Hang Seng index climbed 2.2 percent to 20,803.39. China’s Shanghai Composite surged 2.8 percent to 3,000.65, while South Korea’s KOSPI rose 0.4 percent to 2,002.14. Australia’s S&P ASX 200 was up 0.1 percent at 5,010.30. Southeast Asian markets also rose.

ASIA’S ECONOMY: Softer growth prospects for China and a weak recovery in major industrial economies are expected to push down economic growth in developing Asia to 5.7 percent in 2016 and 2017, below previous projections, according to an Asian Development Bank report released Wednesday. The region’s economy grew 5.9 percent in 2015. The Asian Development Outlook 2016 said China’s economic growth is seen moderating to 6.5 percent this year from 6.9 percent last year and to 6.3 percent next year. Slower exports, a falling labor supply and supply-side reforms are reshaping the world’s second-largest economy toward more domestic consumption and a further reduction in excess industrial capacity, it said.

THE QUOTE: “September is now the only date the markets are pricing with a better than 50 percent probability of a (U.S.) rate hike,” said IG market analyst Angus Nicholson. “A weaker U.S. dollar not only benefits the dollar-denominated price of many commodities, which are a key export for most emerging markets, but it also lowers the burden of U.S. dollar-denominated debt in a range of emerging markets.”

ENERGY: Benchmark U.S. crude gained 71 cents, rising to $39.00 a barrel in electronic trading on the New York Mercantile Exchange. The contract shed $1.11, or 2.8 percent, to $38.28 a barrel on Tuesday. Brent crude, used to price international oils, was up 60 cents at $40.45 a barrel in London.

CURRENCIES: The dollar declined to 112.23 yen from 112.77 yen. The euro rose to $1.1315 from $1.1287. TVJ

source: business.inquirer.net

Global stocks decline ahead of Fed meeting

BEIJING — Global stocks declined Wednesday as investors awaited this week’s U.S. Federal Reserve meeting, expecting possible insights into the state of global growth and future Fed moves.

KEEPING SCORE: In early trading, Britain’s FTSE 100 fell 0.6 percent to 6,136.50, France’s CAC-40 fell 0.5 percent to 4,482.50 and Germany’s DAX shed 0.4 percent to 9,945.74. On Monday, the DAX rose 1.4 percent and the CAC-40 and FTSE both added 0.4 percent. On Wall Street, futures for the Dow Jones industrial average and Standard & Poor’s 500 index both declined 0.4 percent.

ASIA’S DAY: Tokyo’s Nikkei 225 lost 0.7 percent to 17,117.07 and Hong Kong’s Hang Seng declined 0.7 percent to 20,288.77. Sydney’s S&P ASX 200 fell 1.4 percent to 5,111.40 and India’s Sensex retreated 0.9 percent to 24,580.54. Seoul’s Kospi was off 0.1 percent at 1,969.97 and Taiwan, Singapore, Bangkok and Jakarta also fell. The Shanghai Composite Index gained 0.2 percent to 2,864.37 and New Zealand also rose.

WATCHING THE FED: The Federal Reserve’s Federal Open Market Committee meets Tuesday and Wednesday. Investors don’t expect a rate hike but are watching for indications of possible future Fed moves. In December the Fed raised interest rates for the first time in almost a decade, but it left them unchanged in January.

ANALYST’S TAKE: “The most anticipated item on the U.S. economic calendar this week is the FOMC meeting, even though policy will almost certainly be left on hold. With no change in rates, the focus will be entirely on forward guidance,” said Jim O’Sullivan of High-Frequency Economics in a report.

JAPAN CENTRAL BANK: The Bank of Japan left its monetary policy unchanged Tuesday but downgraded its assessment of conditions in the world’s third-largest economy, citing risks from weaker growth in China and other emerging economies and volatility in financial markets, among other factors.

CURRENCY: The dollar slipped to 112.99 from 113.79 yen. The euro edged up to $1.1108 from Monday’s $1.1105.

ENERGY: Benchmark U.S. crude shed 82 cents to $36.36 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.32 on Monday to close at $37.18. Brent crude, used to price international oils, lost 84 cents to $38.69 per barrel in London. On Monday, the contract declined 86 cents to $39.53. TVJ

source: business.inquirer.net

Equities pulled lower by oil, China concerns

NEW YORK - Global equities were lower on Monday, pressured by another downdraft in oil prices and worries over growth in China's economy, while the holiday season kept trading volumes muted.

Prices of both Brent and U.S. crude dropped more than 3 percent , reversing a brief rebound and dragging U.S. energy shares down 1.8 percent as the worst performing of the major S&P sectors.

Crude again moved within sight of an 11-year low. Brent settled at $36.62 and U.S. crude settled at $36.81 as last week's short-covering dried up and players worried that prices had more room to swoon.

"You have energy and tax-loss harvesting moving markets back and forth in these last few weeks," said Tim Courtney, Chief Investment Officer at Exencial Wealth Advisors, which oversees $1.4 billion in assets.

In contrast to oil, U.S. natural gas prices settled up 10 percent at $2.228 per million British thermal units as forecasts for colder temperatures led to bets that long-delayed winter weather was finally arriving.

The Dow Jones industrial average fell 23.9 points, or 0.14 percent, to 17,528.27, the S&P 500 lost 4.45 points, or 0.22 percent, to 2,056.54 and the Nasdaq Composite dropped 7.51 points, or 0.15 percent, to 5,040.99.

A weak batch of industrial profits raised concerns about China's economy and sent Chinese stocks lower by almost 3 percent, their biggest drop in a month.

Profits at Chinese industrial companies in November fell 1.4 percent from a year earlier, the sixth consecutive month of decline and another sign that the world's chief engine of growth for the past decade is sputtering.

MSCI's broadest index of Asia-Pacific shares outside Japan gave up early modest gains to fall 0.53, putting it on track for a 12-percent loss this year.

With trading light in the United States and Europe between Christmas and the upcoming New Year's holidays, as well as a holiday on Monday in the United Kingdom, markets could see exaggerated moves this week.

MSCI's all-country world index lost 0.22 percent, while the pan-European FTSEurofirst 300 index closed down 0.54 percent.

In Europe, the drop in oil prices put pressure on energy stocks such as Repsol and Total.

Yields on benchmark 10-year Treasury notes inched down to 2.2322 percent, up 3/32 in price.

The dollar edged lower against a basket of major currencies, off 0.03 percent at 97.951 as bullish bets on the currency this year on a U.S. Federal Reserve rate hike met year-end profit-taking.

But the drop in oil prices hurt currencies linked to the commodity, such as the Australian and Canadian dollars.

The Australian dollar fell 0.1 percent to $0.7248 while its Canadian counterpart fell 0.6 percent to $1.3902, heading back towards this month's 11-year lows.

Spot gold was down 0.7 percent at $1,068.19 an ounce and was on track for its sixth straight quarterly decline, its longest run of quarterly losses since the mid-1970s. —Reuters

Oil prices extend gains in Asian trade

Singapore – Oil prices climbed in Asia Monday boosted by a weaker dollar and expectations a rise in demand will ease a global supply glut, while investors await the release of key Chinese economic data this week.

Both main crude contracts have rallied since hitting six-year lows in late August, with last week seeing healthy rallies in line with global equities on waning expectations the US Federal Reserve will hike borrowing costs this year, pushing the dollar lower.

A softer dollar makes dollar-priced oil cheaper, spurring demand.

Comments by OPEC secretary general Abdullah el-Badri at the weekend that the cartel sees a "more balanced" oil market next year also provided support.

In afternoon Asian trade, US benchmark West Texas Intermediate for November delivery rose 0.89 percent to $50.07 and Brent crude for November added 0.91 percent to $53.13 a barrel.

Attention is on the release of Chinese trade and inflation data, which will give a fresh idea about the state of the world's biggest energy consumer. Confidence was given a lift at the start of the month by a report indicating the country's key manufacturing sector saw a slight improvement in September.

The news provided some cheer after a string of figures highlighting a sharp slowdown in Chinese growth. Fears about the Asian economic giant were inflamed in August when authorities devalued the yuan currency, raising questions about their grip on the crisis.

Bernard Aw, market strategist at IG Markets Singapore, said Monday's price rise was bolstered after el-Badri said Sunday: "OPEC is confident that it will see a more balanced market in 2016.

 "In recent months, there has been a contraction in production from non-OPEC producers and an increase in global demand."

The comments meant the oil producers' cartel – which accounts for about 40 percent of global production – "still sees stronger demand in the medium term", Aw told AFP.

Despite the recent uptick, oil prices remain depressed owing to concerns about demand as the global economy stutters, a supply glut and the weakness in China. – Agence France-Presse

source: gmanetwork.com

Emerging economies plea for end to US rates agony

Paris, France – Some of the world's biggest emerging economies are pleading for the United States to end their drawn-out agony and raise interest rates now.

Already hit by a commodities crash sparked by the slowing of China's once-booming economy, the mere prospect of the US Federal Reserve raising interest rates – perhaps as soon as Thursday – has battered the emerging giants that were once the world's top performers.

Lured by the promise of bigger returns when the Federal Reserve eventually begins raising interest rates, investors are already moving their money to safer, yet profitable, US destinations.

In August alone, panicky investors dumped equities held in emerging economies to the tune of $8.7 billion, according to the Institute of International Finance. The dollar, meanwhile, has climbed.

The International Monetary Fund warned this month against a "premature" increase in US interest rates as the slowdown in Chinese growth and the ensuing commodities price collapse ripples through the world economy, and emerging economies in particular.

Some key emerging economies, however, would rather bring a swift end to the painful wait.

The Fed's decision is "probably the most anticipated event in the last century," Peru central bank chief Julio Valarde told the Nikkei Asian Review on a visit to Tokyo last week.

"What is surprising is how many central bankers with whom I talk prefer the hike to come as soon as possible," Valarde said, arguing that the uncertainty of the wait was more damaging than the interest rate increase itself.

Indian central bank governor Raghuram Rajan agreed.

"It's preferable to have a move early on and an advertised, slow move up rather than the Fed be forced to tighten more significantly down the line," he told the Wall Street Journal at the Jackson Hole, Wyoming, central bankers' meeting last month.

'Uncertainty created the turmoil'

 For Indonesia's central bank, too, the doubts are of the greatest concern.

"We think US monetary policymakers have got confused about what to do. The uncertainty has created the turmoil," Mirza Adityaswara, deputy governor at Indonesia's central bank, told the Financial Times.

"The situation will recover the sooner the Fed makes a decision and then gives expectation to the market that they increase one or two times and then stop," he said.

Financial markets have not forgotten the precedent of mid-2013 when then Federal Reserve governor Ben Bernanke evoked the possibility of a future increase in interest rates and sparked a flight of capital from emerging markets.

Hopes for an end to the agony may be dashed even if the Fed pulls the benchmark US federal funds rate up from zero percent, where it has been frozen since the financial crisis of 2008, analysts said.

Mixed figures on US employment and uncertainty over Chinese economic growth could prompt Federal Reserve chairwoman Janet Yellen to wait a little longer, analysts said.

Even if she acts, the speculation will live on, warned Philippe Waechter, economist at French investment bank Natixis Asset Management.

Emerging markets "think that if the US moves, the question of capital flight will be resolved and they can turn the page," he said.

"But I am not so sure."

Waechter said the Fed was unlikely to tighten in a series of small steps at every meeting. "If they raise on Thursday, then on Friday we will be asking when the next one comes." – Agence France-Presse

source: gmanetwork.com

Asian shares edge up, brush off soft China data

TOKYO - Asian shares edged up on Monday in cautious trade, brushing off soft economic data from China, as investors looked to whether the US Federal Reserve is confident enough to raise interest rates for the first time in a decade.

US stock futures rose 0.4 percent from late US levels in early Asian trade while Japan's Nikkei rose 0.4 percent. MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.3 percent.

Data published at the weekend showed growth in China's investment and factory output missed forecasts in August, raising the chances that China's third-quarter economic growth may dip below 7 percent for the first time since the global crisis.

The data add to expectations that Beijing will respond with more measures to prop up the economy.

"The numbers fit with our view that China will have to roll out more monetary easing," said Fumio Nakakubo, Japan CIO at UBS's wealth management division.

China's output of key industrial commodities including coal and steel weakened in August, as government measures to prevent smog from affecting World War Two commemorations further cut production already lowered by a slowing economy.

Slowing demand from China are likely to keep a tab on commodity prices.

Influential Wall Street trader Goldman Sachs cut its outlook on oil late last week, lowered its 2016 forecast for US crude to $45 a barrel from $57 previously, citing oversupply and concerns over China's economy.

The investment bank said crude could even fall to near $20 a barrel.

In early trade, US crude futures traded at $44.82, up 0.4 percent from last week's close after a 3.0 percent fall last week.

Still trading in most asset classes could be subdued as investors look to whether the US Fed will raise rates at its policy meeting on Sept 16-17.

"It is fair to say that the full spectrum of views is on offer. Clearly this is the most anticipated Fed meeting in a number of years," analysts at ANZ said in a report.

A small majority of forecasters are sticking to their guns and predicting the Federal Reserve will pull the trigger next week on the first US interest rate increase in nearly a decade.

Traders are pricing in smaller chance of a rate hike, however, suspecting the Fed may tread cautiously given the falls in equity markets and commodities in recent weeks.

"We think it is almost 50-50 whether the Fed will raise rates this week but we expect a rate hike by December on the grounds that the US economy is pretty strong," said UBS's Nakakubo.

In the currency market, the dollar was little changed against major currencies.

Against the yen, it traded at 120.67 yen. The euro stood little changed at $1.1342, holding on to last week's 1.8 percent gain. —Reuters

Yellen says economy on track, defends Fed 'transparency'

WASHINGTON - Federal Reserve Chair Janet Yellen said on Wednesday the U.S. central bank remains on track to raise interest rates this year, with labor markets expected to steadily improve and turmoil abroad unlikely to throw the U.S. economy off track.

"If the economy evolves as we expect, economic conditions likely would make it appropriate at some point this year to raise the federal funds rate," Yellen said in testimony prepared for the U.S. House of Representatives Financial Services Committee, affirming the view of a central bank prepared to gradually raise rates after more than six years at a near-zero level.

Labor markets are "not yet consistent with maximum employment," she said. "Greece remains difficult. And China continues to grapple with the challenges posed by high debt, weak property markets, and volatile financial conditions."

Still, "looking forward, prospects are favorable for further improvement in the U.S. labor market and the economy more broadly."

Her written statement to the committee is to be followed by a hearing later Wednesday morning. The statement largely tracked her recent public comments, as well as the most recent policy statement by the Fed's policy-setting committee.

She did, however, include an explicit defense of the Fed's "transparency and accountability," detailing the central bank's flow of information to financial markets and its press conference and audit schedules as evidence it does not need further congressional oversight.

She will likely be questioned on that very point from members of the Republican-led House committee. House members were critical of the Fed at her previous appearance before them in February. In the intervening months some lawmakers have expressed frustration over the fact that the Fed has not released all of the material Congress has requested as part of an investigation of the possible leak of information from the central bank to an economic consulting company in 2012.

Yellen has said the Fed had declined to send the information because a separate Justice Department probe is ongoing.

Yellen's statement was submitted to the committee along with a lengthier report from the Fed board on the state of the economy and financial markets.

That report included more detail on what the United States faces as it tries to go its own way in a weakened world economy. The expectation that the Fed will diverge from Europe, Japan and other central banks and begin raising rates has pushed up the value of the dollar, and driven down exports and U.S. growth, making the Fed's outlook less certain, the report said.

The report also noted concerns about a possible liquidity crisis if bond markets become stressed, an issue some investors and market analysts have cited as a potential source of future trouble. The staff report said that while there is some evidence bond markets are not as "deep" or liquid as they used to be, there is not convincing evidence of "notable deteriorations."  — Reuters

Wall St. opens higher, investors look to Yellen

NEW YORK - US stocks opened higher on Tuesday, boosted after earnings from JPMorgan and Goldman Sachs, though investors were looking ahead to testimony from U.S. Federal Reserve Chair Janet Yellen.

The Dow Jones industrial average rose 46.69 points or 0.27 percent, to 17,102.11, the S&P 500 gained 2.95 points or 0.15 percent, to 1,980.05 and the Nasdaq Composite added 6.92 points or 0.16 percent, to 4,447.34.

Shares of Goldman rose 1.5 percent to $169.67 while JPMorgan rose 3.8 percent to $58.41. — Reuters

source: gmanetwork.com

Yellen sworn in as first woman Fed chair

WASHINGTON - Janet Yellen was sworn in Monday to a term as chair of the U.S. central bank, the Federal Reserve said in a statement.

Yellen succeeds Ben Bernanke to become the first woman to head the Fed. Her term as chair ends February 3, 2018.

The oath was administered by Governor Daniel Tarullo, the Fed said. — Reuters

source: gmanetwork.com

US Fed cuts stimulus as expected; Bernanke prepares to depart

WASHINGTON - The U.S. Federal Reserve on Wednesday announced a further $10 billion reduction in its monthly bond purchases as it stuck to a plan to wind down the extraordinary stimulus despite recent turmoil in emerging markets.

Fed Chairman Ben Bernanke, who hands the central bank's reins to Vice Chair Janet Yellen on Friday, also adjourned his last policy-setting meeting without making any changes to the U.S. central bank's other main policy plank: its longer-term plan to keep interest rates low for some time to come.

The Fed acknowledged that "economic activity picked up in recent quarters, in a statement after the two-day meeting, a nod to the broader U.S. economic strength that prompted it to decide last month to begin reducing the asset purchase plan.

Starting in February, the Fed will buy $65 billion in bonds per month, down from $75 billion now. It shaved its purchases of U.S. Treasuries and mortgage bonds equally.

The decision received unanimous backing from Fed policymakers.

Overall signs of improvement in the U.S. economy suggested they would stay on track to cut the purchases in line with what Bernanke predicted would be "measured" steps until the program was shelved later in the year.

A selloff in emerging market currencies and stocks in recent days, and disappointing U.S. job growth in December, did not deter Fed officials.

The meeting is Bernanke's last before Vice Chair Janet Yellen moves into the top spot.

He took the Fed far into uncharted territory during his eight years on the job, building a $4 trillion balance sheet and keeping interest rates near zero for more than five years to pull the economy from its worst downturn in decades.

Policymakers on Wednesday stuck to their promise to keep rates near zero until well after the U.S. unemployment rate, now at 6.7 percent, falls below 6.5 percent, especially if inflation remains below a 2-percent target.

With concerns growing over possible harm from so much money printing, the Fed decided last month to make its first cut to the bond buying.

Data in recent weeks, from consumer spending and confidence to industrial production, was largely upbeat and has bolstered the view of an improving economy. Forecasters estimate U.S. GDP grew at an above-trend annual rate of 3.2 percent in the fourth quarter after notching a 4.1 percent advance in the prior three months.

The show of strength provides a welcome backdrop for Bernanke, who steps down on Friday after an unusually tumultuous and highly experimental stint atop the world's most influential central bank.  — Reuters

source: gmanetwork.com

White House rejects latest Republican offer to end shutdown

WASHINGTON - The White House rejected a Republican plan to reopen portions of the US government on Tuesday as the first shutdown in 17 years closed landmarks like the Statue of Liberty and threw hundreds of thousands of federal employees out of work.

The back and forth offered no sign that President Barack Obama and Republicans can soon end a standoff over health care that has sidelined everything from trade negotiations to medical research and raised new concerns about Congress's ability to perform its most basic duties.

The Republican plan would restore funding for national parks, veterans services, and the District of Columbia. Other government services would remain unfunded.

While the selective funding approach appeared to unite conservative and moderate Republicans for now, the White House said Obama would veto it. Democrats who control the Senate said they would reject it before it reached Obama's desk.

Republicans who control the House of Representatives said Obama could not complain about the impact of the shutdown while refusing to negotiate. "The White House position is unsustainably hypocritical," said Michael Steel, a spokesman for House Speaker John Boehner.

An even bigger battle looms in coming weeks, when Congress must raise the debt limit or risk a US default that could roil global markets.

"This is a mess. A royal screwup," said Democratic Representative Louise Slaughter of New York.

Obama accused Republicans of taking the government hostage in order to sabotage his signature health care law, the most ambitious US social program in five decades.

"They've shut down the government over an ideological crusade to deny affordable health insurance to millions of Americans," Obama said in the White House Rose Garden.

Republicans in the House view the Affordable Care Act as a dangerous extension of government power and have coupled their efforts to undermine it with continued government funding. The Democratic-controlled Senate has repeatedly rejected those efforts.

Spending authority for much of the government expired at midnight on Monday (0400 GMT), but that did not prevent the Obama administration from opening on Tuesday the health-insurance exchanges that form the centerpiece of the law.

Veterans pass barricades

Republicans said their latest proposal would help elderly veterans who earlier in the day pushed past barricades at the National World War II Memorial to get into the shuttered site.

"They're coming here because they want to visit their memorial, the World War II memorial. But no, the Obama administration has put barricades around it," said Republican Representative Mike Simpson ofIdaho.

Democrats said Republicans were resorting to gimmicks to avoid a vote that would restore funding to the entire government because they were afraid it would pass.

"That's important--a park? How about the kids who need daycare?" said Democratic Representative Sander Levin of Michigan. "You have to let all the hostages go. Every single one of them."

The veterans in question had gotten in to the memorial with help from several Republican lawmakers. But they didn't seem particularly interested in taking sides.

"It's just like a bunch of little kids fighting over candy," said George, Atkinson, an 82-year-old Coast Guard veteran of the Korean War. "The whole group ought to be replaced, top man down."

The plan appeared to temporarily unite Republicans, heading off a split between Tea Party conservatives who pushed for the government funding confrontation and moderates who appear to be losing stomach for the fight.

Before a meeting of House Republicans, Representative Peter King, a New York moderate, estimated that more than 100 of the chamber's 232 Republicans would back Obama's demand to restore all government funding without conditions. That would be enough to easily pass the House with the support of the chamber's 200 Democrats.

The shutdown closed landmarks like the Grand Canyon and pared the government's spy agencies by 70 percent. In Washington, the National Zoo shut off a popular "panda cam" that allowed visitors to view its newborn panda cub online. In Pennsylvania, white supremacists had to cancel a planned rally at Gettysburg National Military Park.

Market reaction

Whether the shutdown represents another bump in the road for a Congress increasingly plagued by dysfunction or is a sign of a more alarming breakdown in the political process could be determined by the reaction among voters and on Wall Street.

Stock investors appeared to be taking the news in stride with investors confident a deal could be reached quickly. The S&P 500 closed up 0.8 percent and the Nasdaq Composite gained 1.2 percent.

But the US Treasury was forced to pay the highest interest rate in about 10 months on its short-term debt as many investors avoided bonds that would be due later this month, when the government is due to exhaust its borrowing capacity.

If Congress can agree to a new funding bill soon, the shutdown would have little impact on the world's largest economy.

A week-long shutdown would slow US economic growth by about 0.3 percentage points, according to Goldman Sachs, but a longer disruption could weigh on the economy more heavily as furloughed workers scale back personal spending.

The last shutdown in 1995 and 1996 cost taxpayers $1.4 billion, according to congressional researchers.

The political crisis raised fresh concern about whether Congress can meet a crucial mid-October deadline to raise the government's $16.7 trillion debt ceiling. Some Republicans see that vote as another opportunity to undercut Obama's healthcare law.

Failure to raise the debt limit would force the country to default on its obligations, dealing a blow to the economy and sending shockwaves around global markets.

A 2011 standoff over the debt ceiling hammered consumer confidence and prompted a first-ever downgrade of the United States' credit rating.

Analysts say this time it could be worse. Lawmakers back then were fighting over how best to reduce trillion-dollar budget deficits, but this time they are at loggerheads over an issue that does not lend itself to compromise as easily: an expansion of government-supported health benefits to millions of uninsured Americans.

Republicans have voted more than 40 times to repeal or delay "Obamacare," but they failed to block the launch of its online insurance marketplaces on Tuesday. The program had a rocky start as government websites struggled to cope with heavy online traffic.

"What I'm hearing from my constituents at home is if this is the only way to stop the runaway train called the federal government, then we're willing to try it," said Texas Senator John Cornyn, the second-ranking Republican in the Senate.

A Reuters/Ipsos poll showed 24 percent of Americans would blame Republicans, while 19 percent would blame Obama or Democrats. Another 46 percent said everyone would be to blame.

The shutdown battles of the 1990s didn't substantially affect public's opinion of then-Democratic President Bill Clinton or his Republican adversaries, the Gallup polling organization said.

Republicans and Democrats traded blame for the shutdown, but many seemed deeply embarrassed for the institution as a whole.

Several said they planned to donate their salaries to charity or forego pay altogether.

"This is a black eye on our government at all levels," said Republican Representative Michael Grimm of New York. "I think it's a low point for us." — Reuters

source: gmanetwork.com

European stocks slip after Fed-inspired rally

London – European stock markets fell in opening deals on Friday, as traders took profits from recent gains after the US Federal Reserve's shock decision to keep its aggressive stimulus program intact.

London's benchmark FTSE 100 index dipped 0.21 percent to 6,611.39 points, the Paris CAC 40 reversed 0.25 percent to 4,195.63, and Frankfurt's DAX 30 eased 0.01 percent to 8,693.32 points from Thursday's closing levels.

Equities in Europe had soared on Thursday, joining a global rally as investors welcomed the US central bank's surprise decision. – Agence France-Presse

source: gmanetwork.com