Stock markets calm after US budget deadlock

In mid-morning trading the FTSE 100 is down ten points at 6452, while the market holds it breath as the US government begins a partial shutdown.

Equity markets have reacted relatively well to the deadlock in Washington, which has led to the first partial shutdown in 17 years. The failure to reach an agreement over the US budget could leave thousands of state workers on a reduced week with no guarantee of back pay. The budget discussions will soon take a back seat to the debt ceiling talks which take centre stage in mid to early October, and these negotiations pose more of a threat to the US credit rating than a partial shutdown.

In London, the mining sector is lower for the second day in a row after the latest manufacturing report from Beijing came in below expectations; the Chinese economy is not making the turnaround that some economists had hoped. European equities are outperforming their UK equivalent after the jobless rate in Germany and Italy unexpectedly ticked higher, as traders interpret the bad news as good news following Mario Draghi's assertion that the ECB will support the region if necessary.

We are expecting the Dow Jones to open 30 points higher at 15,159, as traders shrug off the partial government shutdown.

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