Spreadex Market Update

Dow sinks while Asian and European markets remain stable as US government shuts down.



In a failure of bi-partisan politics the US government has entered a state of shutdown. A Republican plan to enforce cuts to Obama care has left the two sides in a deadlock and up to 800,000 employees on unpaid leave. With the Dow sinking 0.79% in anticipation of a lockout yesterday and Asian and European markets remaining fairly stable this could indicate the markets have already reacted to the news. The wider implications for the World Economy are the major concerns with growth in the US expected to be reduced by 1.4%.

There is worry that the partial government shutdown will kill any momentum in discussions about the debt ceiling. With the deadline getting ever closer, October 17th, any distractions from the topic could increase the likelihood of a government default.

Gold speculators are practically frothing at the mouth in anticipation of huge price movements with a flight to gold a very real possibility the longer the shutdown drags on. Other investors however believe that should gold fails to rally in these economic conditions this will demonstrate the underlying weakness of the metal and could lead to a further sell off.

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