U.S. stocks dip on Washington fiscal impasse; Dow down 0.40%

U.S. stocks fell on Wednesday as budget talks continued in the U.S. Congress with fears growing that the impasse could prompt a government shutdown.

Lackluster U.S. data dampened stock prices as well.

At the close of U.S. trading, the Dow Jones Industrial Average finished down 0.40%, the S&P 500 index fell 0.27%, while the Nasdaq Composite index fell 0.19%.

Congress must approve of a spending package to fund the federal government by October or risk forcing the government to partially shut down as it hits its debt ceiling.

The House of Representatives recently approved legislation to fund the government through Dec. 15, however, lawmakers also voted to defund President Barack Obama's healthcare bill, the Affordable Care Act.

While the bill faces little chance of survival, concerns that both parties will go back and forth crafting and rejecting spending proposals as the U.S. approaches its debt ceiling repelled investors away from stocks.

The bill remained in the Senate on Wednesday.

Spotty data in the U.S. also managed to convince investors to spend the day elsewhere.

In a report, the Census Bureau said that U.S. new home sales rose 7.9% to a seasonally adjusted 421,000 units in August from a downwardly revised 390,000 in July. Analysts were expecting new home sales to rise to 420,000 units last month. 

A separate report showed that U.S. core durable goods orders, excluding transportation items, fell 0.1% in August, disappointing expectations for a 1% increase, after an upwardly revised 0.5% contraction the previous month. 

Overall durable goods orders in the U.S. rose 0.1% last month, short of expectations for a 0.2% increase following a downwardly revised 8.1% decline in July.

Elsewhere, a report that Wal-Mart Stores was planning to cut orders to deal with rising inventories added to losses as well, though Wal-Mart later labeled the report as misleading.

Leading Dow Jones Industrial Average performers included JPMorgan Chase, up 2.74%, Cisco, up 1.28%, and Merck, up 0.40%.

The Dow Jones Industrial Average's worst performers included Wal-Mart Stores, down 1.44%, Johnson & Johnson, down 1.29%, and Procter & Gamble, down 1.14%.

European indices, meanwhile, finished mixed.

After the close of European trade, the EURO STOXX 50 rose 0.08%, France's CAC 40 fell 0.01%, while Germany's DAX 30 rose 0.01%. Meanwhile, in the U.K. the FTSE 100 finished down 0.30%.

On Thursday, the U.S. is to release its weekly report on initial jobless claims, as well as final data on second-quarter growth and private-sector data on pending home sales.

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Forex - Dollar falls on lackluster data, U.S. fiscal jitters

The dollar edged lower against most major currencies on Wednesday as fears brewed that a fiscal impasse in Washington could potentially shut down the government and roil markets, while soft data clouded expectations as to when the Federal Reserve will begin tapering stimulus programs.

Improving German sentiment data sent investors chasing the euro on Wednesday, which further weakened the U.S. currency.

In U.S. trading on Tuesday, EUR/USD was up 0.39% at 1.3525.

The House of Representatives recently approved legislation to fund government through Dec. 15, however, lawmakers also voted to defund President Barack Obama's healthcare bill, the Affordable Care Act, which set the stage for a fiscal showdown between Democrats and Republicans.

While the bill faces little chance of survival, concerns that both parties will go back and forth crafting and rejecting spending proposals as the U.S. runs close to hitting its debt ceiling repelled investors away from the greenback.

Failure to agree on a solution could result in a government shutdown in October.

Spotty data in the U.S. weakened the greenback by leaving investors unable to guess when the Federal Reserve will begin to taper the size or pace of its USD85  billion asset-purchasing program, which seeks to spur recovery by driving down interest rates, weakening the dollar in the process.

In a report, the Census Bureau said that U.S. new home sales rose 7.9% to a seasonally adjusted 421,000 units in August from a downwardly revised 390,000 in July. Analysts were expecting new home sales to rise to 420,000 units last month. 

A separate report showed that U.S. core durable goods orders, excluding transportation items, fell 0.1% in August, disappointing expectations for a 1% increase, after an upwardly revised 0.5% contraction the previous month. 

Overall durable goods orders in the U.S. rose 0.1% last month, short of expectations for a 0.2% increase following a downwardly revised 8.1% decline in July.

Meanwhile in Europe, solid German consumer confidence bolstered demand for the euro.

The forward looking GfK index of German consumer confidence rose to 7.1 for October, while September’s reading was revised up from 6.9 to 7.0.

Analysts were expecting the October figure to come in at 7.0

The greenback was down against the pound, with GBP/USD up 0.49% at 1.6082.

The pound saw support after the Confederation of British Industry reported that its retail sales index rose to 34.0 in September from 27.0 in August, the highest level since June 2012. Analysts were expecting the index to decline to 24.0.

The dollar was down against the yen, with USD/JPY down 0.31% at 98.44, and down against the Swiss franc, with USD/CHF trading down 0.45% at 0.9088.

The dollar was up against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.12% at 1.0313, AUD/USD down 0.26% at 0.9367 and NZD/USD trading down 0.40% at 0.8248.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.36% at 80.40.

On Thursday, the U.S. is to release the weekly report on initial jobless claims, as well as final data on second quarter growth and private sector data on pending home sales.

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Forex - GBP/USD gains on U.K. retail data, U.S. fiscal jitters

The pound firmed against the dollar after U.K. industry data on retail sales beat expectations, while U.S. fiscal uncertainties repelled investors away from the greenback.

In U.S. trading on Wednesday, GBP/USD was trading at 1.6074, up 0.44%, up from a session low of 1.5980 and off from a high of 1.6082.

Cable was likely to find support at 1.5956, Tuesday's low, and resistance at 1.6163, the high from Sept. 18.

The pound saw support after the Confederation of British Industry reported that its retail sales index rose to 34.0 in September from 27.0 in August, the highest level since June 2012. Analysts were expecting the index to decline to 24.0.

Fiscal uncertainty in the U.S., meanwhile, pressured the dollar lower.

The House of Representatives recently approved legislation to fund government through Dec. 15, however, lawmakers also voted to defund President Barack Obama's healthcare bill, the Affordable Care Act.

While the bill faces little chance of survival, concerns that Democrats and Republicans will go back and forth crafting and rejecting spending proposals as the U.S. runs close to hitting its debt ceiling sent investors moving away from the greenback.

Failure to agree on a solution could result in a government shutdown in October.

Spotty data in the U.S. weakened the greenback by keeping investors unable to guess when the Federal Reserve will begin to taper the size or pace of its asset-purchasing program, which seeks to spur recovery by driving down interest rates and softens the greenback in the process.

In a report, the Census Bureau said that U.S. new home sales rose 7.9% to a seasonally adjusted 421,000 units in August from a downwardly revised 390,000 in July. Analysts were expecting new home sales to rise to 420,000 units last month. 

A separate report showed that U.S. core durable goods orders, excluding transportation items, fell 0.1% in August, disappointing expectations for a 1% increase, after an upwardly revised 0.5% contraction the previous month. 

Overall durable goods orders in the U.S. rose 0.1% last month, short of expectations for a 0.2% increase following a downwardly revised 8.1% decline in July.

The pound, meanwhile, was up against the euro and up against the yen, with EUR/GBP down 0.08% at 0.8412 and GBP/JPY up 0.20% at 158.36.

On Thursday, the U.K. is to produce a report on the current account, as well as revised data on second quarter economic growth.

The U.S. is to release the weekly report on initial jobless claims, as well as final data on second quarter growth and private sector data on pending home sales.

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European stocks remain lower amid Fed jitters; Dax down 0.38%

European stocks remained lower on Wednesday, despite positive German data as uncertainty over the future of the Federal Reserve's bond-buying program continued to dominate market sentiment. 

During European afternoon trade, the EURO STOXX 50 declined 0.31%, France’s CAC 40 retreated 0.45%, while Germany’s DAX 30 slid 0.38%. 

Data showed that German consumer confidence is seen rising to the highest level since June 2007 in October. The GfK index of German consumer confidence rose to 7.1, while this month’s reading was revised up from 6.9 to 7. 

But markets were jittery amid uncertainty over the future direction of U.S. monetary policy after New York Federal Reserve President William Dudley defended last week’s decision by the Fed to keep its stimulus program on track.

European equities had found some support on Tuesday after senior European Central Bank official Ewald Nowotny said it was too soon for the bank to exit from crisis measures. 

Financial stocks were mixed, as BNP Paribas climbed 0.61% and Societe Generale slipped 0.17% in France, while Germany's Deutsche Bank retreated 0.69%. 

Among peripheral lenders, Spanish banks Banco Santander and BBVA rose 0.22% and 0.31% respectively, while Italy's Intesa Sanpaolo slid 0.41%. 

Elsewhere, Nordea Bank plummeted 2.78% as Sweden started selling its remaining 7% stake in the Nordic region’s largest lender. 

On the upside, Gas Natural and Enagas rallied 3.57% and 1.19% after Goldman Sachs raised both stocks to "buy" from "neutral", citing the impending review of gas regulation in Spain as positive for both companies. 

In London, FTSE 100 shed 0.46%, led by sharp losses in Carnival shares, down 6.73% after the cruise company' said its profit dropped 30% in the third quarter and that bookings so far for the next nine months are lower than in previous years. 

Meanwhile, mining stocks remained on the upside, with BHP Billiton and Rio Tinto gaining 0.51% and 0.45% respectively, while Fresnillo jumped 1.85%. 

Financial stocks were also mostly higher. The Royal Bank of Scotland saw shares surge 3.27% and Lloyds Banking advanced 0.97%, while Barclays rallied 1.68%. HSBC Holdings was little changed on the other hand, dipping 0.01%. 

In the U.S., equity markets pointed to a steady open. The Dow Jones Industrial Average futures pointed to a 0.06% dip, S&P 500 futures signaled a 0.11% fall, while the Nasdaq 100 futures indicated a 0.05% loss. 

Later in the day, the U.S. is to release data on durable goods orders, in addition to a report on new home sales.

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U.S. futures slip ahead of data, Fed in focus; Dow Jones down 0.14%

U.S. stock futures pointed to a slightly lower open on Wednesday, as investors eyed the release of U.S. data later in the day amid ongoing uncertainty over the future of the Federal Reserve's stimulus measures. 

Ahead of the open, the Dow Jones Industrial Average futures pointed to a 0.14% loss, S&P 500 futures signaled a 0.18% decline, while the Nasdaq 100 futures indicated a 0.10% fall. 

Markets were jittery amid uncertainty over the future direction of U.S. monetary policy after New York Federal Reserve President William Dudley defended last week’s decision by the Fed to keep its stimulus program on track.

Speaking Monday, Dudley said the pace of the U.S. economic recovery remains insufficient to start tapering the bank’s USD85 billion-a-month asset purchase program.

The Fed said last week that it wanted to see more evidence of a sustained economic recovery before it adjusted the scale of its bond buying program. The decision surprised markets, which had been expecting a modest reduction to the bank’s stimulus program. 

Financial stocks were expected to remain in focus, following reports JPMorgan Chase resumed settlement talks with the U.S. after authorities prepared to sue the bank on Tuesday in California federal court. 

The bank is accused of misrepresented the quality of mortgage-backed securities it sold from 2005 to 2007. JPMorgan shares were down 0.24% in pre-market trade. 

The insurance sector was also likely to be active, after New York Life Insurance agreed to acquire a Dexia unit for USD512 million, as it expands its business of managing money for investors. 

Also in company news, Applied Materials slipped 0.26% in extended trading after the chipmaker, agreed to acquire Tokyo Electron for USD9.39 billion in stock, in the largest deal for a Japanese company from outside the country in six years. 

Elsewhere, Facebook shares slipped 0.10% pre-market after Hong Kong newspaper South China Morning Post reported on Tuesday that the social-networking giant, Twitter and other websites deemed sensitive and blocked by the Chinese government will be accessible in a planned free-trade zone in Shanghai. 

Other stocks likely to remain in focus included AutoZone and Bed Bath & Beyond, scheduled to report quarterly earnings later in the day. 

Across the Atlantic, European stock markets were lower. The EURO STOXX 50 fell 0.14%, France’s CAC 40 slipped 0.27%, Germany's DAX declined 0.28%, while Britain's FTSE 100 edged down 0.15%. 

During the Asian trading session, Hong Kong's Hang Seng Index added 0.13%, while Japan’s Nikkei 225 Index slid 0.76%. 

Later in the day, the U.S. is to release data on durable goods orders, in addition to a report on new home sales.

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Dollar rangebound, German data lifts euro

The dollar was trading within recent ranges against the other major currencies on Wednesday as ongoing uncertainty over the outlook for U.S. monetary policy saw investors remain cautious. 

During European late morning trade, the dollar was lower against the yen, with USD/JPY down 0.18% to 98.56.

Investor sentiment remained negative following last week’s unexpected decision by the Federal Reserve to keep its USD85 billion-a-month asset purchase program on track.

The Fed said it wanted to see more evidence of a sustained economic recovery before it reduced stimulus. The decision surprised markets, which had been expecting a modest reduction in bond buying.

Data on Tuesday underlined concerns over the outlook for the U.S. economic recovery. U.S. house prices were higher in July, but consumer confidence slipped lower in September, amid fears over whether economic momentum can be maintained in the months ahead.

Investors were looking ahead to U.S. data on durable goods orders and new home sales later in the trading day.

Elsewhere, the euro pushed higher against the dollar, with EUR/USDrising 0.29% to 1.3511. 

The single currency found support after data released on Wednesday showed that German consumer confidence is seen rising to the highest level since June 2007 in October.

The forward looking GfK index of German consumer confidence rose to 7.1, and this month’s reading was revised up from 6.9 to 7. 

The dollar was lower against the pound and the Swiss franc, withGBP/USD rising 0.16% to 1.6027 and USD/CHF losing 0.26% to trade at 0.9106.

Sterling was boosted after a report compiled by the Confederation of British Industry showed that its retail sales index rose to 34.0 in September from 27.0 last month, the highest level since June 2012. 
Analysts had expected the index to decline to 24.0.

Elsewhere, the greenback was broadly higher against its Australian, New Zealand and Canadian counterparts, with AUD/USD down 0.30% to 0.9361, NZD/USD falling 0.59% to 0.8232 and USD/CAD edging up 0.05% to 1.0306.

In New Zealand, data on Wednesday showed that the trade deficit widened to NZD1,191 million in August, from a deficit of NZD774 million the previous month. Analysts had expected the trade deficit to narrow to NZD743 million.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.20% to 80.54.

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