(Bloomberg) – US equity index futures fell cautiously before the big banks' income, and there is no sign that the longest partial state shutdown in modern history is coming to an end. European equities followed Asian equities after Chinese trade data was disappointed.
"US decommissioning is now a depressing period from an economic perspective," and most analysts expect weak profits from banks, said Nick Twidale, chief operating officer at Rakuten Securities Australia in Sydney. "This should put pressure on the US indices as we move through the week."
Despite the shutdown, US equities recorded a third consecutive week when US Federal Reserve Chairman Jerome Powell signaled a more cautious stance and expectations of a positive outcome from the talks. The S & P 500 has rallied more than ten percent since Christmas Eve on the edge of a bear market.
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"It is too early to say that we have seen the lows," said Shane Oliver, Investment Strategy Director and chief economist of AMP Capital Investors Ltd. in Sydney. "There are a number of problems that could plunge the markets," and could trigger another test of the December low or hit new lows in the coming months, he wrote in a note to clients.
Citigroup Inc. Occurs After gaining big banks on Monday, the industry became increasingly unstable as analysts became increasingly pessimistic and issued a series of cuts in ratings and price targets earlier in the month. Cost management, geopolitics and credit growth are key issues as investors assess the impact of Fed policy rate hikes and President Donald Trump's trade war with China.
Also in the eyes of investors are the most significant economic implications of the partial government deadlock in modern times on Saturday and showing no signs of decline. About 800,000 state workers failed to pay their salaries for the first time on Friday.
Trump and the Democrats remain in dispute over the president's call for frontier wall financing. While the president has not ruled out a national emergency to end the deadlock, his budget team is preparing emergency closure plans that will last until the end of February, a government official said.
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