http://seattletimes.com/html/nationworld/2021935792_apworldmarkets.html

LONDON —

The partial shutdown of the U.S. government weighed on markets Wednesday, though hopes that Italy's government will win a confidence vote helped shore up confidence on the Milan exchange.

The political crises in Washington D.C. and Rome have been the main points of focus in financial markets this week. While the gridlock in the U.S. capital shows few signs of resolution, developments in Italy suggest that a political crisis may be averted.

In the U.S., the shutdown, which has seen some 800,000 federal employees put on furlough, went into effect after a politically divided Congress failed to approve short-term funding to keep the government functioning past Monday, the end of its fiscal year.

Though most analysts said they expect the budget stalemate to be resolved before the shutdown inflicts damage on the economy, the latest stalemate has raised concerns over whether Congress will be able to increase the country's debt ceiling later this month. If it doesn't, the U.S. would face a potential default, a development that could inflict massive damage on the global economy.

"Let's just hope that this standoff makes Congress wake up and smell the coffee," said Dennis de Jong, general manager at UFX Markets. "The shutdown is far from ideal, but failure to raise the government's $16.7 trillion debt ceiling later this month would be disastrous for the world economy."

Those concerns were dominating stock markets after what had been a fairly benign response on Tuesday to the gridlock in the U.S.

In Europe, the FTSE 100 index of leading shares was down 0.7 percent at 6.412 while Germany's DAX fell 0.4 percent to 8.657. The CAC-40 in France was 0.6 percent lower at 4,172.

Outperforming all others in Europe was Milan's FTSE MIB, which was trading 1.2 percent higher at 18,184 amid signs that Premier Enrico Letta's government would survive a confidence vote. Italy was dragged into a potential crisis this week when Silvio Berlusconi demanded his five Cabinet ministers quit the coalition headed by Letta.

"Letta's government looks to be on a far sounder footing following extensive behind-the-scenes discussions," said Alastair McCaig, market analyst at IG.

The European Central Bank will share some of the limelight later when it announces its latest policy decision at a meeting in Paris. No changes in interest rates are expected but investors will be keeping a close watch on what ECB President Mario Draghi says in his ensuing press conference.

In the U.S., the focus will remain on developments in D.C. However, the monthly private payrolls figures from the firm ADP will be monitored, especially as the government's official nonfarm payrolls report is unlikely to be published Friday due to the partial shutdown.

Wall Street was headed for a lower opening, with Dow futures down 0.5 percent and the broader S&P 500 futures 0.6 percent lower.

The dollar remained under pressure too, with the euro up a further 0.1 percent at $1.3532 while the dollar fell 0.5 percent to 97.52 yen.

Earlier in Asia, markets were solid following the previous day's relatively strong showing in U.S. markets. Hong Kong's Hang Seng rose 0.6 percent to 22,984.48, reopening after a one-day public holiday while South Korea's Kospi rose marginally to 1,999.47. Markets in mainland China were closed for a public holiday.

However, Japan's Nikkei 225 index plummeted 2.2 percent to close at 14,170.49 after the government Tuesday announced it would go ahead with a sales tax increase in April. The tax, intended to offset the country's soaring public debt, will rise from 5 percent to 8 percent.

http://online.wsj.com/article/BT-CO-20131001-710592.html

NEW YORK--Stocks edged higher as investors looked past deadlock in Washington and the first U.S. government shutdown in 17 years.

The Dow Jones Industrial Average advanced 36 points, or 0.2%, to 15165, giving up some gains in afternoon trading. The S&P 500 tacked on nine points, or 0.5%, to 1690, and the Nasdaq Composite Index rose 31 points, or 0.8%, to 3802.

Global stocks gained ground despite U.S. lawmakers' failure to reach agreement to keep the government fully funded to start the new fiscal year. Traders said that the markets anticipated the political gridlock, which has contributed to the Dow falling seven of the past eight sessions, including Monday's 129-point slide.

"The market definitely priced in a shutdown, and when you get one, a good portion of the Street is hedged," said Lawrence McDonald, chief U.S. equity, fixed income and political policy strategist at Newedge.

Uncertainty over what the shutdown might mean for the economy, combined with worries about protracted political dysfunction ahead of talks to raise the debt ceiling over the next few weeks, has given investors pause in the stock market, which saw benchmarks at all-time highs less than two weeks ago.

"We're not going to have a smooth run into any deal. There's going to be big up days and down days because of what's at stake," Mr. McDonald said.

Senate Democrats and House Republicans remained at loggerheads over government spending and the launch of the Affordable Care Act. The tension showed few signs of easing Tuesday, with President Barack Obama placing blame for the shutdown on certain House Republicans' "ideological crusade" during remarks in the Rose Garden at the White House.

Other traders said the market moves reflected the view that the turmoil in Washington might be short-lived.

"Most people are pretty sure that this is going to be a short-lived event," said Ian Winer, director of equity trading at Wedbush Securities. "Even though there were big moves leading up to this, most people are positioned for a near-term shutdown, and it looks like the selling has let up. There's not a lot of new buying, but guys have sold what they wanted to sell."

U.S. manufacturing activity in September unexpectedly picked up, according to data released by the Institute for Supply Management. The ISM's manufacturing purchasing managers' index stood at its highest reading so far this year, rising to 56.2 from 55.7 in August.

The Commerce Department didn't release Tuesday morning's scheduled report on construction spending, the first economic data to be affected by the government's partial shutdown.

All 10 of the S&P 500's sector groups advanced, led by health-care and technology stocks. Apple rose after billionaire investor Carl Icahn tweeted Tuesday morning about his dinner with Apple's chief executive, Tim Cook, at which Mr. Icahn said he "pushed hard" for the tech giant to buy back stock.

Merck was the biggest gainer on the Dow after the pharmaceutical company unveiled cost-cutting measures that include roughly 8,500 additional layoffs. The company aims to save about $2.5 billion a year by the end of 2015.

http://www.stuff.co.nz/southland-times/business/9169487/Myfarm-close-to-trading-shares

Rural property syndicator MyFarm expects to have its planned share trading platform operating on the Unlisted market next month.

The move has important implications for investors because as well as improving share liquidity in MyFarm's syndicated dairy farms, it could also provide a model for share trading for more widely held commercial property syndicates and may eventually provide the base for the float of a substantial farm owning entity.

MyFarm has been a major syndicator of dairy farms and has also started syndicating sheep and cattle farms through a new company, MyFarm Sheep & Beef (see story page nine).

One of the major drawbacks of property syndicates, whether they own a farm or a commercial property such as an office building, is a potential lack of liquidity in a syndicate's shares or units in cases where individual investors want to cash up before the syndicate is wound up.

This could be a particular problem for farm syndicates because they are often structured as limited partnerships where the minimum investment can be $200,000 or more, restricting the pool of potential purchasers of any interests that were offered for resale.

MyFarm intends to tackle the problem through the use of collective investment vehicles (CIVs). These would be special purpose companies set up to acquire the interests of investors who were wanting to sell out of farm syndicates.

Each CIV would offer shares to new investors, in bundles of say $20,000, making them more accessible to the general public than limited partnerships.

The shares could then be traded on MyFarm's Unlimited platform.

MyFarm successfully used the CIV structure to allow investors in one of its limited partnerships to sell down their holdings in July.

MyFarm director Andrew Watters said the CIV model would be the standard method of arranging a sale for syndicate members wanting to sell their interests, from now on.

How well the CIV shares trade on Unlisted is likely to be watched closely by the major commercial property syndication companies because the potential lack of liquidity in their schemes is one of the major negatives investors must consider when weighing up whether or not to commit their money to them.

MyFarm now manages farms collectively worth around $550m, with about two thirds of them in syndicated ownership, according to Watters.

If its CIV plan is successful, it is likely that the proportion of those assets controlled by CIVs will progressively increase until a substantial market has been created.

Once the number of investors and the value of the assets they own is large enough, it might be possible to merge individual CIVs into a single, large farm owning entity which could eventually be listed on the NZX, although Watters said the company had no plans to do that "at this stage".

Wall Street trading in U.S. fuel credits hurting consumers: NYT

Wall Street banks, including JPMorgan , have engaged in speculative trading and stockpiled U.S. renewable fuel credits turning a federal environmental program into a profit stream, The New York Times reported on Sunday.

A JPMorgan trader pressed the bank to buy all the Renewable Identification Numbers (RINs) it could, The Times said citing an unnamed industry executive. Prices for the credits spiked by as much as 20-fold between January and mid-summer.

With the supply of available RINs growing tighter, JPMorgan offered to sell hundreds of millions fuel credits to refiners this year, The Times reported.

JPMorgan's role and that of other banks in the RINs market has hurt U.S. refineries that often acquire RINs to avoid stiff penalties from the U.S. Environmental Protection Agency (EPA), The Times reported, adding that the moves have likely contributed to higher gasoline prices at the pump.

U.S. refiners and gasoline importers must generate or buy RINs to comply with EPA rules requiring they blend growing quantities of ethanol into gasoline supplies. RINs prices spiked from 7 cents in January to a high of $1.43 this summer, before retreating to 60 cents, the newspaper said.

The price spike has saddled U.S. refineries with huge bills and refiners have passed along the higher costs to consumers, the report said.

Independent refiner Valero Corp estimated that its cost to acquire RINs would skyrocket to $800 million, The Times reported.

A spokesman for JP Morgan in an email to Reuters said, "The fact of the matter is, we simply do not trade RINs, nor do we carry an inventory other than a marginal amount for compliance purposes.

"From time to time, we offer to purchase RINs on behalf of clients who need to fulfill their EPA-mandated obligations, but our activity is so limited that the last time we assisted a client in the market was over a year ago," the spokesman said.