European equities started the trading week in red as market traders continue to worry over the US budget.
The European Euro Stoxx 50 was seen 1.17% lower at 2,882.56 points, while the German DAX dropped 1.14% lower at the market open. At the same time the French CAC 40 lost 1.18% to 4,138.89 points, while the British FTSE 100 declined 1.14% opening at 6, 44.57 points.
European Equities – US Government Shutdown
There is a high chance that the largest economy in the world could face its first government shutdown since 1996. President Barack Obama’s healthcare law has been postponed by the Republican dominated house by a year.
The Congress has to agree on the US budget spending before October 1, to avoid a government shutdown.
Meanwhile analysts are worried over the possible government shutdown, analysts are expecting Congress to increase the debt limit and point out that Obama’s administration has faced the outlook of bankruptcy six times in the past three years.
On Friday, the House Minority Democratic leader Nancy Pelosi said that “House Republicans’ astonishing disregard for the stability of our economy goes well beyond their threats to shut down the government services for the American people.”
“Threats and willingness to default is a luxury that the American people cannot afford,” Pelosi added.
Germany’s retail sales
In Germany, the Federal statistical office (Destatis) posted the country’s retail sales, which showed a rise of 0.3% in August, compared to the previous rise of 2.9% in the same month last year. The indicator grew by 0.5% on a monthly basis.
China Manufacturing PMI
China’s HSBC Purchasing Managers’ Index (PMI) came in at 50.2 points in September, lower than the estimated 51.2 points but slightly higher than the recorded 50.1 points in the previous month.
“The September HSBC China Manufacturing PMI edged up slightly from August. New orders remained flat from the previous month, while external demand improved,” Hongbin Qu, chief economist at HSBC China said.
“Manufacturers restocking process continued but remained relatively slow. Growth is bottoming out on Beijing’s mini-stimulus. We expect continuous policy efforts to sustain the recovery,” he added.
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