The FTSE has been drifting lower in sympathy with the Dow since the one-day surge in response to the non-taper. It looks like it could settle in the 6450-6500 range for a time, while the US sorts out its budget and debt ceiling wrangles, then bounce.
The Dow hasn’t reacted that strongly to the US government wrangling, so, presumably, the market is expecting a resolution which means that things could get shaky if we don’t get one. The Tea Party element of the Republicans really don’t like Obamacare and are looking to force a delay in its implementation, but I don’t think there is much public support for shutting down the government, which is what will happen this week if they don’t agree to the President’s budget, so I think it likely that a deal will be done. Personally, as a pinko liberal European, I don’t see what is so terrible about providing health care to poor people, but apparently the Republicans feel that it is a socialist infringement of individual liberty.
The next stumbling block is the debt ceiling, which will be hit in two or three weeks time. Again the Republicans want spending cuts (like abandoning Obamacare) in return for agreeing to raise it. Given the potential consequences of a government default, again, it seems likely that a deal will be done.
The FTSE has been drifting lower in sympathy with the Dow since the one-day surge in response to the non-taper. It looks like it could settle in the 6450-6500 range for a time, while the US sorts out its budget and debt ceiling wrangles, then bounce.
