Global stock markets diverged yesterday as investors stuck to the sidelines in face of the US government shutdown.
While Wall Street opened lower, Europe’s main stock markets were mixed, with prices edging higher in Frankfurt and Paris but easing in London. 
London’s  FTSE 100 was down 0.3% at 7,708.82, Frankfurt’s DAX 30 gained 0.2% to 13,463.69 and Paris’s- CAC 40 rose 0.3% to 5,541.65 at close yesterday.
“Stock markets in Europe are a mixed bag... as investors assess the political landscape,” said CMC markets UK analyst David Madden.
“The shutdown of the US government has not spooked investors as there was a similar muted reaction the last time it happened in 2013, but nor has it given traders a reason to buy into the market.”
Forex.com analyst Fawad Razaqzada said the market “remains fixated on developments in Washington.”
“The fact that neither the dollar nor the stock markets have sold off heavily yet means investors are probably still hopeful – maybe rightly so – that there will be some sort of a resolution in Washington soon. If that’s proven to be the case then we could see a speedy recovery in both markets,” he said.
Patrick O’Hare of Briefing.com said Day Three of a government shutdown was not enough to worry markets excessively.
“The game of political brinkmanship has been played so many times now that market participants aren’t going to be unnerved too greatly at this stage of the game,” he said. 
In the eurozone, Germany’s centre-left Social Democrats voted Sunday to begin formal coalition talks with Chancellor Angela Merkel’s conservatives.
The news, which brought Europe’s top economy a step closer to a new government after months of deadlock, helped guide the euro higher.
“This is a step in the right direction for German politics and traders will be watching it closely,” Madden noted.
The thumbs-up will come as a huge relief to Merkel, staving off the threat of snap polls or the unappealing prospect of leading an unstable minority government.
“Eurozone investors will be breathing a sigh of relief this morning, as Angela Merkel took one step closer to cementing a fourth term as German chancellor,” added IG analyst Joshua Mahony.
Shares in the French and German telecoms giants, Orange and Deutsche Telekom, were boosted by a report in French daily Le Monde that the two held merger talks between May and September 2017 last year, traders said.
Orange shares ended the day around 2% higher, while Deutsche Telekom added 1.8%. 
The report said there were “confidential discussions” held between the two companies examining the options for a “merger of equals”.
Possible market-moving events this week include meetings at the European Central Bank and Bank of Japan, which will be closely watched for signs of further policy tightening.




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