US STOCKS-Wall Street in broad slump as gov't shutdown draws near

* Possibility of budget deal before midnight seen as remote

* All S&P 500 sectors fall, energy and financials drop

* Major indexes still on track for positive September

* Indexes down: Dow 0.9 pct, S&P 0.8 pct, Nasdaq 0.8 pct

By Ryan Vlastelica

NEW YORK, Sept 30 (Reuters) - U.S. stocks fell sharply on Monday as a last-minute deal to resolve a budget impasse in Washington appeared less likely, increasing the chances of a partial government shutdown.

Losses were broad, with all ten S&P 500 sectors lower on the day, led by energy and financials shares. About 80 percent of companies traded on both the New York Stock Exchange and Nasdaq fell.

The House of Representatives early on Sunday voted for an emergency spending bill that includes a one-year delay of President Barack Obama's signature healthcare overhaul despite threats of a veto from the White House.

A shutdown would have wide-ranging implications for a most types of assets. If a deal is reached quickly, markets might recover, but a prolonged shutdown could do significant harm to the economy and consumer confidence. While a deal could still be reached before the government's fiscal year ends at midnight on Monday, such a possibility was considered unlikely.

Up to 1 million government employees could be furloughed by the absence of a deal, and if the shutdown takes place, the Labor Department will postpone issuing its closely watched monthly employment report scheduled for Friday.

"The government is such an important part of the entire economy, between the people it employs and the impact it has on consumer confidence," said Nicholas Colas, chief market strategist at the ConvergEx Group in New York. "The size of the selloff is logical given the stakes."

Energy shares slumped 1.1 percent, dropping alongside a 1.5 percent fall in crude oil prices. Exxon Mobil fell 1.3 percent to $85.79 while Occidental Petroleum sank 1.6 percent to $92.93.

Financial shares were also lower, falling 1 percent. Goldman Sachs dropped 1.8 percent to $156.94 and Citigroup Inc was off 1.7 percent at $48.04.

The Dow Jones industrial average was down 142.57 points, or 0.93 percent, at 15,115.67. The Standard & Poor's 500 Index was down 13.13 points, or 0.78 percent, at 1,678.62. The Nasdaq Composite Index was down 30.16 points, or 0.80 percent, at 3,751.43.

The S&P broke under its 50-day moving average of 1,679.88, which had been serving as support. The next key level is the index's 100-day average of 1,659.29, 1.9 percent below current levels.

Wall Street has managed to weather similar incidents in the past. During the shutdown from Dec. 15, 1995, to Jan. 6, 1996, the S&P 500 added 0.1 percent. During the Nov. 13 to Nov. 19, 1995 shutdown, the benchmark index rose 1.3 percent, according to data by Jason Goepfert, president of SentimenTrader.com.

That precedent may not hold this time, given that economic growth continues to be weak. Wall Street may also be ripe for a selloff, with the S&P near an all-time high and having escaped any sustained pullback this year.

For the month of September, the Dow is up 2 percent, the S&P is up 2.7 percent and the Nasdaq is up 4.4 percent.

The Chicago Purchasing Managers index rose more than expected in September, climbing to 55.7 from 53 in the previous month. Analysts were expecting a reading of 54. The positive data had little lasting impact on the market's gloomy tone.

In company news, Active Network Inc jumped 26 percent to $14.37 after the company said it would be taken private by Vista Equity Partners for $1.05 billion.

Overseas, China's factory sector grew only slightly in September as domestic demand faltered, a private survey showed. It was an unexpectedly weak outcome that suggests a firm rebound in Asia's economic powerhouse remains elusive.

A split in Italy's ruling coalition has heightened the prospects of fresh elections that could delay economic reforms. Ten-year Italian government bond yields jumped for a third straight day.

View the original article here

REFILE-GLOBAL MARKETS-Dollar, shares fall as U.S. government shutdown looms

* Dollar hits 7-1/2 month low against major currencies

* Wall Street opens lower as budget deal looks unlikely

* World shares weaken but set to end quarter with gains

* Italian bond yields off highs as election fears recede

By Richard Hubbard

LONDON, Sept 30 (Reuters) - Concerns about a looming political showdown in Washington rattled investors on Monday, sending equities and the dollar lower, though moves that could help Italy's government survive saw Italian shares pare losses.

Deadlock in the U.S. Congress has made it increasingly possible the government will run out of money from midnight, while a split in Italy's ruling coalition had heightened fears of fresh elections that could delay key economic reforms.

U.S. stocks opened lower, with investors fearful a prolonged government shutdown could have significant implications for economic growth and consumer confidence.

The dollar was down 0.6 percent against a basket of major currencies at a 7-1/2 trough. It was close to a 1-1/2 year low against the Swiss franc and a one month low against the Japanese yen - both currencies investors tend to see as a safe haven for their money in times of financial uncertainty.

Conversely U.S. Treasuries benefited from a view that the economic damage from a government shutdown would be yet another reason for the Federal Reserve to delay scaling back its monetary stimulus.

"It looks like we're heading toward a shutdown but its probably going to be a relatively brief thing," said Phil Tyson, interest rates strategist at brokers ICAP.

Tyson said a bigger risk lay in the upcoming debate over the U.S. government's debt ceiling, which has the potential to cause a default that would rock world financial markets.

Adding to market worries was a surprise downward revision to activity in China's factory sector for September, suggesting Asia's economic powerhouse is still struggling to gain traction after a period of slower growth.

Combined with month-end and quarter-end caution among big investors, the end result was a shift out of equities and oil. MSCI's world equity index was down 0.5 percent and Brent oil fell to less than $108 a barrel.

MSCI's global index, which tracks shares in 45 countries, remains on course for its best quarter since March 2012 and its best month since January as the loose monetary policies of major central banks and signs of modest global economic recovery favour equities over alternative investments.

ITALIAN FEARS

In Europe, Italian government bond yields came off their highs after Reuters reported that as many as 20 senators from the centre-right party of Silvio Berlusconi were ready to form a breakaway group if he continues to threaten to bring down Italy's government.

The crisis had escalated over the weekend when the former premier pulled his ministers out of the frail ruling coalition and called for new elections, just seven months after the last, inconclusive vote.

Benchmark 10-year Italian debt yields at one point were up as much as 31 basis points to 4.73 percent on the potential for political paralysis before easing back to be up 16 bpts at 4.61 percent after the report.

The selloff in Italy only had a muted impact on other riskier euro zone government bonds with investors drawing comfort from the improving outlook for the region and an ongoing promise of support from the European Central Bank.

The political instability left Milan's blue-chip FTSE MIB index down 1.6 percent, though it too was off its lows. The broad FTSEurofirst 300 index was down nearly one percent with bank shares taking the brunt of the selling.

The worries saw the euro touch a five month low against the Swiss franc at 1.2218 and it was down 0.8 percent on the yen at 131.78 yen, having earlier fallen to a three-week low of 131.385 yen.

The possibility of a U.S. government shutdown did support gold, which is another refuge for investors in time of uncertainty, leaving the precious metal headed for its best quarterly performance in a year.

Spot gold as trading at $1,335.99 an ounce, building on 1 percent gain on Friday.

Copper also edged up, extending gains it has made on the brighter global economic outlook and adding 0.3 percent to trade at $7,322 a tonne.

"There is obviously a negative economic impact of any shutdown which could weigh on copper. But if a shutdown does occur there is less chance that the Fed will reduce stimulus this year," said analyst Tim Radford at Sydney-based advisory Rivkin.

View the original article here

UPDATE 5-Brent falls below $108 on worries of U.S. shutdown

* U.S. government faces shutdown on funding impasse

* Market reacts after Obama, Iran's Rouhani talk on phone

* Italy government turmoil piles on uncertainty (Recasts, updates throughout)

By Ron Bousso

LONDON, Sept 30 (Reuters) - Brent crude oil fell more than $1 to below $108 a barrel on Monday, heading for its first monthly decline since May, as a looming U.S. government shutdown clouded the outlook for demand, while tensions over Iran continued to ease.

Brent was down 94 cents to $107.69 a barrel by 1354 GMT, set for a 5.6 percent monthly drop. U.S. crude was down $1.58 at $101.29 a barrel.

"The markets are starting the week on the defensive as the U.S. politicians in Washington D.C. are bringing the U.S. Federal government very close to a shutdown," said oil analyst Dominick Chirichella at Energy Management Institute.

A last-minute deal between Republicans and Democrats to resolve a budget impasse appeared less likely, increasing the chances of the U.S. government shutting down at midnight in Washington for the first time in 17 years.

U.S. stocks opened lower on Monday as investors shifted toward safe havens such as the Japanese yen and Swiss franc.

Concerns that Italy might plunge once again into political turmoil eased after senators from the centre-right party were ready to rebel against Silvio Berlusconi if he continues to threaten to bring down the government.

"Given the political uncertainty prevailing in the U.S. and Italy and the evident rapprochement between the U.S. and Iran, there is a threat of oil retreating further over the next few days towards $105 a barrel (Brent) and $100 a barrel (WTI)," analysts at Commerzbank said.

U.S.-IRAN THAW

U.S. President Barack Obama and new Iranian President Hassan Rouhani spoke by telephone on Friday, the highest-level contact between the two countries in three decades as both sides seek a deal over Iran's nuclear programme.

"The phone call between Obama and Rouhani was a bit late on Friday, so that needs to be priced in, but is the continuation of the improving sentiment over Iran," Olivier Jakob, an analyst at Petromatrix, said.

Exports from Iran have more than halved in recent years to around 1 million barrels per day in 2012 due to tightening sanctions.

Iran's top four crude buyers - China, India, Japan and South Korea - cut their purchases by 16 percent in the first eight months of 2013.

World powers are due to hold a new round of talks over Iran's nuclear programme in mid-October in Geneva.

Supply concerns have also eased in recent weeks as exports from Libya have recovered to above 580,000 barrels per day, following weeks of disruption.

Investors cut their net long positions in Brent for a fourth week in a row to 167,745 contracts, the InterContinental Exchange (ICE) said. (Additional reporting by Florence Tan in Singapore; editing by Jane Baird and Keiron Henderson)

View the original article here

CANADA FX DEBT-Loonie firms after GDP data, but U.S. shutdown eyed

Sorry, I could not read the content fromt this page.

View the original article here

FOREX-Dollar skids on greater chance of U.S. government shutdown

* Dollar index falls to lowest since February

* Dollar struggles as U.S. government shutdown deadline looms

* Political crisis in Italy weighs on euro

* Euro to remain weighed by ECB policy

By Julie Haviv

NEW YORK, Sept 30 (Reuters) - The dollar dropped against a broad swath of currencies on Monday as an 11th-hour deal to resolve a Washington budget battle looked more unlikely, raising the possibility of a partial government shutdown.

With a deadline to avert a federal government shutdown fast approaching, the U.S. Capitol was eerily quiet on Sunday as Republicans and Democrats waited for the other side to blink first and break the impasse over funding.

The high-stakes brinkmanship in Congress will resume on Monday when the Democratic-controlled Senate reconvenes at 2 p.m. (1800 GMT).

The dollar fell 0.5 percent against a basket of six major currencies to last trade at 80.108, not far from an earlier trough of 80.030, its lowest since February.

"The potential of a government shutdown could result in a sustained fiscal drag on the economy that could push out any monetary policy normalization by the Federal Reserve," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington D.C.

"Consequently, a government shutdown would likely weigh on the dollar, especially against traditional safe-haven assets like the Japanese yen and the Swiss franc," he said.

In early New York trade, the dollar was down 0.5 percent at 97.72 yen after earlier hitting a one-month low of 97.48 yen.

It also fell 0.2 percent against the Swiss franc at 0.9034 francs, not far from the 0.9018 francs hit last week, which was its lowest since April 2012.

The U.S. funding standoff is a harbinger of the next big political battle: a far-more consequential bill to raise the federal government's borrowing authority.

Failure to raise the $16.7 trillion debt ceiling by mid-October would force the United States to default on some payment obligations - an event that could cripple its economy and send shockwaves around the globe. Such a scenario should sink the dollar further.

The euro was down 0.4 percent at 132.24 yen having earlier fallen to a three-week low of 131.33 yen.

However, the euro gained against the dollar to trade 0.1 percent higher at $1.3538. The euro dominates the composition of the dollar index.

Reflecting the market's nervousness, one-month euro/dollar implied volatility, a gauge of expected price swings and derived from option prices, rose sharply to around 7.40 vols, its highest since early September, up from 6.50 vols last week.

The euro earlier had been weighed down by an Italian political crisis sparked by Silvio Berlusconi's withdrawal of his ministers from the government on Saturday and call for new elections, just seven months after the last vote.

Prime Minister Enrico Letta will seek support in a confidence vote, probably on Wednesday.

"We are in for a risk-off day as we have a bit of a nasty combination of U.S. and Italian political problems," said Arne Lohmann Rasmussen, head of FX research at Danske Bank.

"This is positive for the yen, Swiss franc and sterling. We would not buy the dollar as a government shutdown would reduce the chances of the Federal Reserve 'tapering' its stimulus and that is dollar negative."

The euro could come under further pressure if European Central Bank president Mario Draghi reiterates on Wednesday, when the bank announces its rate decision, that he stands ready to pump more liquidity into the economy if needed.

Analysts at Morgan Stanley said that although they maintain their long euro position they "adopt a cautious approach. Indeed, the focus will also switch to the ECB meeting this week, where a dovish stance is expected," adding that a move above $1.3570 would be needed for further gains towards $1.3710.

In the U.S., the political standoff over public finances looks far from a resolution with Republican legislators sticking to efforts to quash President Barack Obama's healthcare plan by withholding funds from the government.

Latest weekly Commodity Futures Trading Commission data showed currency speculators had cut their bets in favor of the dollar to the lowest net long in seven months.

View the original article here

Ferris Bueller Explains The Government Shutdown

“typically non-partisan funding bill” GAO
United States General
Accounting Office
Office of the General Counsel
January 2004
Principles of Federal Appropriations Law
Third Edition

The Appropriations Clause has been described as “the most important single curb in the Constitution on Presidential power.”

It means that “no money can be paid out of the Treasury unless it has been appropriated
by an act of Congress.”
Cincinnati Soap Co. v. United States , 301 U.S. 308, 321 (1937).
See also B-300192, Nov. 13, 2002. Regardless of the nature of the payment—salaries, payments promised under a contract, payments ordered by a court, whatever—a federal agency may not make a payment
from the United States Treasury unless Congress has made the funds available. As the Supreme Court stated well over a century more than 150 years ago: “However much money may be in the Treasury at any one
time, not a dollar of it can be used in the payment of any thing not… previously sanctioned [by a congressional
appropriation].”
http://www.gao.gov/assets/210/202437.pdf

View the original article here