Since the partial shutdown of the US government has extended into its fourth day, governmental agencies and departments will not be releasing economic data as scheduled, as politicians continue to wrangle over the budget and the crucial debt ceiling limit.

Market Analyst Craig Erlam from Alpari said that the announcement has been expected ever since the Democrats and Republicans failed to agree on a budget in time for Monday night’s deadline. “Now that it has been confirmed, there’s going to be very little else driving the markets on Friday, with no progress expected in negotiations on the budget and debt ceiling on Capitol Hill.”

Markets are hoping that Congress will agree to raise the $16.7tn debt limit by the 17 October deadline to prevent the US government defaulting on its obligations, something that the Treasury Department said could have a “catastrophic effect” on all aspects of the US economy. It said in a report on Thursday that a default could lead to “events of the magnitude of late 2008 or worse”.

House Speaker John Boehner reportedly said that he would not allow a default and would consider using a combination of Republican and Democratic votes to lift the debt ceiling if needed. According to an article in The New York Times, Boehner is willing to violate the so-called Hastert Rule which refers to “not bringing to the floor any measures that does not have a majority of Republican votes”, the paper said.

Mining stocks were among the worst performers early on as risk appetite declined on the back of the continuing uncertainty in the US. Fresnillo, Randgold, Anglo American, Glencore Xstrata and BHP Billiton were all registering moderate losses early on.

Barclays was out of favour despite receiving a ratings upgrade by Investec from ‘add’ to ‘buy’. The broker said it expects the third-quarter results later this month to be “lacklustre” but its upgrade is due to a combination of: the passing of the rights issue, valuation and dividend support; and the potential for “over-delivery” of cost-reduction targets.

Other financials however were performing relatively well this morning with insurers Standard Life, Prudential, Resolution and RSA edging higher, along with banking giant HSBC.

Sweeteners and food ingredients group Tate & Lyle was trading broadly flat after a mixed second- quarter update. The company said that adjusted operating profits in the second quarter were slightly below last year due to softness in the US beverage sector but it still maintained its guidance for “another year of profitable growth” in the 12 months to March 2014.

Source: ShareCast