TSX in for lower session, worries grow about duration of government shutdown

TORONTO – The Toronto stock market looked set for a lower session Wednesday as concerns grew about how long a partial U.S. government shutdown may last.

Traders also worried about how negotiations to end this impasse will impact the next expected stalemate over raising the U.S. government’s debt ceiling.

The Canadian dollar was down 0.14 of a cent to 96.71 cents US.

U.S. futures were negative as the Dow Jones industrial futures fell 69 points to 15,051, the Nasdaq futures lost 14.5 points to 3,231 and the S&P 500 futures shed 8.25 points to 1,681.25.

Indexes worsened after payroll firm ADP reported that the U.S. private sector created 166,000 jobs last month, lower than the 178,000 that had been expected.

That’s all the jobs data that traders will get this week as one of the spinoff effects of the government showdown is an absence of government data that usually moves markets. The Labor Department said Tuesday it won’t be issuing its employment report for September on Friday.

Market reaction to the partial government shutdown that started Tuesday has been relatively muted on hopes that economic damage from the budgetary impasse wouldn’t be too severe as long as it didn’t last too long.

But there is growing dismay that the standoff on Capitol Hill shows no signs of easing with some lawmakers in both parties suggesting the shutdown might last for weeks.

Adding to the grim mood is a deadline of Oct. 17 when the U.S. hits its debt limit and starts to run out of money to pay bills.

“Given the U.S. government shutdown and fast-approaching debt limit deadline, volatility with a negative bias looks the likely mix for markets in days ahead,” said a commentary from Barclays Research.

Meanwhile, there was an important sign that Italy’s government would survive a confidence motion following a decision by former premier Silvio Berlusconi to back the administration. Berlusconi had earlier said his party wouldn’t support premier Enrico Letta’s ruling coalition.

That’s a turnaround from last week when Berlusconi demanded his five Cabinet ministers in the government quit and bring it down, incensed at a vote planned Friday that could strip him of his Senate seat following his tax fraud conviction and four-year prison sentence.

In corporate news, The Globe and Mail reported that BlackBerry (TSX:BB) (Nasdaq:BBRY)is looking at tapping the value of its extensive real estate holdings in the Waterloo, Ont.-area to raise cash. It said that BlackBerry has asked for ideas to generate the largest possible return from its real estate in as little time as possible, through a confidential process begun last week.

TransCanada Corp. (TSX:TRP) has acquired two additional solar power facilities in Ontario as part of a multi-year agreement with Canadian Solar Solutions. TransCanada didn’t disclose the cost of the individual plants but Canadian Solar says they’re valued at more than $95 million.

Commodity prices were mixed with the November crude contract on the New York Mercantile Exchange down 10 cents to US$101.94 a barrel.

December copper was unchanged at US$3.27 a pound while December bullion gained $8.70 to US$1,294.80 an ounce.

European bourses were also lower while the European Central Bank kept its key interest rate at a record low 0.5 per cent, holding off on more stimulus for the economy of the 17-member euro currency union as it monitors the tentative recovery.

London’s FTSE 100 index lost 0.51 per cent, Frankfurt’s DAX declined 0.37 per cent while the Paris CAC 40 was down 0.47 per cent.

Earlier in Asia, Hong Kong’s Hang Seng rose 0.6 per cent, reopening after a one-day public holiday while South Korea’s Kospi rose marginally. Markets in mainland China were closed for a public holiday.

However, Japan’s Nikkei 225 index fell 2.2 per cent after the government Tuesday announced it would go ahead with a sales tax increase in April.