FTSE extends decline as US issues persevere

In mid-morning trading the FTSE 100 is down 45 points as the debt ceiling deadline draws nearer.

Equity markets are becoming increasingly nervous as relations between the Democrats and Republicans have yet to thaw, while the US shutdown has left hundreds of thousands of state employees out of work without back pay. The current stalemate largely boils down to the ‘Obamacare’ issue, but could slip over to the more pressing debt ceiling problem soon, and as the clock runs down to the 17 October deadline, traders fears are likely to increase.

National Grid was down 0.3% earlier this morning after warning that a particularly cold winter could stretch the electricity network, potentially causing a blackout this winter.

UK homebuilders like Bovis Homes and Persimmon have become victims of their own success, after the UK government’s Help to Buy scheme boosted the RICS house rice index to an 11-year high, raising fresh concern of a housing bubble.

With the volatility index having risen nearly 50% since June, this afternoon we are expecting the Dow Jones to open 20 points lower at 14,916.

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