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It is becoming clear that the lack of resolution on the US government shutdown and the approaching debt-ceiling deadline trumps any QE taper speculation. With all European indices slightly higher in early trade, the underlying sentiment seems to be marginally hopeful of a resolution from the US government. The FTSE 100 is clinging to its 200-day moving average, underperforming its counterparts as the miners continue to weigh on any upside.
Financial stocks are performing well with some notable exceptions. Barclays received a broker upgrade from Investec yet many are less-than-optimistic about Q3 results due out later this month. Standard Chartered were on the receiving end of a broker downgrade last night and have taken the bottom spot on the blue-chip index, with the share price falling 1.5%.
Carpetright shareholders were floored this morning on warnings that full-year profit would be well below previous expectations. The departure of chief executive Darren Shapland is not doing much to help. The share price has fallen 10% in early trade.
German PPI data proved to be softer year on year, declining 0.5% versus the 0.1% fall expected. This may well spur the European Central Bank to embark on its long-term refinancing operation (LTRO) sooner rather than later if the lack of inflation is to be addressed.
In the absence of a non-farm payrolls release today, traders will have to make do with speeches from two US Federal Reserve members later this afternoon. Both William Dudley and Jeremy Stein generally come in at the dove end of the scale when it comes to monetary policy. Given how conflicting the general guidance has been from the Fed over the past few months, it’s difficult to assess what impact their words will have on the general market direction.