Market Primer: Wednesday, October 2: Asian Markets Optimistic About A Short Shutdown

The US showed little progress toward reaching an agreement and ending the nation’s first government shutdown in 17 years on Wednesday.

However, Asian markets took the government halt calmly with investors taking the news one day at a time and expecting Republicans and Democrats in Washington to come to a decision soon. Most see the chances of a Federal Reserve taper becoming less likely the longer the two sides remain at a stalemate.

Top News

In other news around the markets:

• Billionaire activist investor Carl Icahn tweeted about a Monday night dinner with Apple’s Chief Executive Tim Cook, which caused Apples shares to rise about 2 percent on Tuesday. Icahn was apparently pressuring Cook to do a $150 billion buyback, which Icahn says will push Apple’s shares past $700 a share.
• Just weeks after Microsoft CEO Steve Ballmer announced his upcoming retirement, rumors are swirling that some of the company’s investors are lobbying the board to pressure Bill Gates to do the same. Reuters reported that a group of three investors who hold about 5 percent of Microsoft’s stock have been pressuring board members to ask Gates to step down to allow the new CEO the freedom to make substantial changes.
• In an effort to deter North Korea from using nuclear arms, the US and South Korea have signed a new strategy which takes into account Norh Korea’s long range missile programs and chemical weapons to take a more tailored approach at preventing an attack.
• At the European Central Bank meeting today, President Mario Draghi is expected to try to take some of the shine off the common currency by hinting at another long-term refinancing operation. The bank is expected to keep interest rates fixed and refrain from any major policy changes, but to use the press conference following the meeting to provide more forward guidance.

Asian Markets

Asian markets were mostly higher as investors watched the political battle in Washington for clues about the length of the Government shutdown. The Japanese NIKKEI was the only index to post a loss, down 2.17 percent as investors took profits. The South Korean KOSPI was mostly flat and Indonesia’s JSX Composite was up 0.79 percent. China’s markets were closed for a public holiday.

European Markets

European markets slid ahead of the ECB meeting. The UK’s FTSE was down 0.85 percent and the eurozone’s STOXX 600 lost 0.71 percent. The Spanish IBEX was down 0.39 percent and Germany’s DAX lost 0.65 percent.

Commodities

Energy futures dropped lower on Wednesday; Brent futures slipped 0.30 percent and WTI futures lost 0.51 percent. Gold was up 0.46 percent but silver lost 0.19 percent. Industrial metals were down across the board with zinc falling the furthest, down 2.09 percent.

Currencies

The dollar tread water on Wednesday as markets looked to the US government for signs of a breakthrough. The pound gained 0.17 percent and the euro was up just 0.06 percent against the dollar. The yen was up 0.55 percent against the greenback.

Earnings

Notable companies that reported earnings on Tuesday included:

• Walgreen Co. WAG reported EPS of $0.73 on revenue of $17.94 billion, compared to last year’s EPS of $0.63 on revenue of $10.07 billion.
• Actuant Corporation ATU reported EPS of $0.50 on revenue of $327.26 million, compared to last year’s EPS of $0.86.

Pre-Market Movers

Stocks moving in the pre-market included:

• Newmont Mining Corp NEM gained 0.37 percent in pre-market trade after suffering a sharp 3.17 percent drop on Tuesday.
• Alcoa Inc AA lost 3.30 percent in pre-market trade despite Tuesday’s 0.62 percent gain.
• Citigroup Inc C was down 0.91 percent in pre-market trade as fallout from an ongoing legal battle over the sale of risky debt pressured the company’s shares.
• Carnival Corp CCL fell continued to suffer, falling 5.67 percent over the past week and 0.86 percent in pre-market trade this morning.
• Joy Global Inc JOY was down 0.60 percent in pre-market trade after improving 1.12 percent on Tuesday.

Earnings

Earnings Reports Expected On Wednesday Include:

• Monsanto Company MON is expected to report a loss of $0.43 per share on revenue of $2.24 billion, compared to last year’s loss of $0.44 per share on revenue of $2.11 billion.
• Texas Industries, Inc. TXI is expected to report EPS of $0.01 on revenue of $233.6 million, compared to last year’s loss of $0.09 per share on revenue of $191.81 million.

Economics

Wednesday’s economic calendar includes an address from Federal Reserve Chairman Ben Bernanke, US crude inventories, The ECB rate decision and press conference,  US construction spending, British construction PMI and Spanish unemployment change data.

Good luck with your mid-week trades!

For a recap of Tuesday’s market action, click here

Tune into Benzinga’s pre-market info show with Dennis Dick and Joel Elconin here.