Roiled by U.S. & Italian politics, safe havens gain
September 30, 2013
SYDNEY, Sept 30 — Tokyo seen as one among the safe havens. — U.S. stock futures and the dollar came under pressure today as a shutdown of the U.S. government seemed increasingly likely, though the euro had political troubles of its own as the Italian government teetered on the edge of collapse.
The result was a general rush to safe havens including the yen, Swiss franc and some sovereign debt. U.S. Treasuries also benefited from a view that the economic damage done by a government closure would be yet another reason for the Federal Reserve to keep interest rates low for longer.
“Weekend political dynamics in the U.S. and Italy are likely to keep markets on the defensive at the start of a busy week for data and policy events,” wrote analysts at Barclays in a note.
The damage was clear in U.S. stock futures where the S&P 500 contract shed 0.8 per cent, as did the E-MINI S&P. Asian stocks could follow that lead lower, though markets in the region are usually reluctant to be the first to react to U.S. and European events that happen over a weekend.
The air of risk aversion lifted the yen across the board. The dollar fell to ¥97.88 from ¥98.20 late in New York on Friday, while the euro sank to ¥131.98 from ¥132.78.
The euro also lost ground to the Swiss franc, hitting its lowest since early May at one point.