1st Oct 2013 09:27
LONDON (Alliance News) - UK shares are lower Tuesday as investors react to the news that the US government has partially shutdown.
Following the news that Democrats and Republicans could not find a suitable budget compromise, the US government has started to shutdown. Subsequently, hundreds of thousands of federal employees are set to begin unpaid leave.
As investors wait to see when the two houses of Congress will re-enter negotiations, the US government edges ever-closer to its next major fiscal obstacle. With government debt set to hit its limit in the next few weeks, investors wait to see if the world's number-one economy will default on its debt. If it does, the US could see its credit rating downgraded.
A raft of European data has been released Tuesday, largely weighing on investor sentiment.
Markit manufacturing PMI data from Italy and Germany both missed consensus forecasts cited by FXstreet.com. Similarly, UK PMI data showed a fall to 56.7 from 57.2 in August, behind the 57.3 forecast.
EU PMI figures came in-line with expectations. French data was the only figure to exceed forecasts, expanding to 49.8, slightly ahead of the 49.5 expectation.
German unemployment figures demonstrated a surprise gain in September as it climbed by 25,000. Consensus forecasts had expected to see a decline of 5,000, according to FXstreet.com.
Italian unemployment data also was worse than expected.
By mid-morning Tuesday, the FTSE 100 is down 0.1% at 6,453.39, the FTSE 250 is relatively flat at 14,905.75, and the AIM All-Share index is down 0.6% at 788.15.
At the individual equity level, Unilever, down 3.8%, leads the fallers on the blue-chip index. The multinational consumer goods company released a trading update after the market close Monday. It warned that it has seen growth in many emerging markets slow in the third quarter and now expects underlying sales growth of 3% to 3.5%, citing weaker demand from emerging markets due to the weakness of their currencies.
Conversely, Wolseley is one of the biggest gainers on the FTSE 100 after it reported a sharp increase in fiscal 2013 profit. The board has recommended a higher final dividend, and has proposed a capital return of 300 million pounds through a special dividend and share consolidation. The results impressed Liberum Capital, saying European, including the UK, results were less bad than feared.
Still to come Tuesday, US Redbook index figures are set to be released at 1355 BST. US Markit manufacturing data is scheduled for 1358 BST.
By James Kemp; [email protected]
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