European and US stock markets sagged Thursday, as Britain ended a pandemic jobs support scheme, German investors digested disappointing economic data along with post-election uncertainty, and Wall Street ended third quarter trading with a selloff.
The three major US indices finished lower in the day's session as investors were turned off by ongoing brinksmanship in Washington and the clear drag on the economic recovery posted by the Delta variant of Covid-19. For the quarter, only the S&P 500 gained with a 0.2 percent rise, while the Dow and Nasdaq fell modestly.
Just before markets closed, Congress managed to avert a government shutdown, after the House and Senate approved a stopgap bill to fund the government several hours before its deadline.
But yawning differences over raising the debt ceiling and President Joe Biden's sweeping infrastructure and social spending agenda remain unresolved.
"There are a lot of things that still need to be worked out," said Tom Cahill, a portfolio strategist at Ventura Wealth Management, who said the array of unknowns "is definitely weighing on the market."
London equities advanced timidly early in their session then closed slightly lower as Britain marked the end of its furlough programme and investors shrugged off news that the economy rebounded more than expected in the second quarter.
Frankfurt and Paris also slid back, losing 0.7 percent and 0.6 percent, respectively, at the close.
"It's been a strange week so far and that may be feeding into the lack of direction we are seeing across equity markets today," noted Oanda analyst Craig Erlam.
Oil prices were higher on supply concerns and the dollar steadied after soaring in the previous day on hopes of tighter US monetary policy.
Investors remain worried about rising inflation, the debt crisis at Chinese real estate developer Evergrande and the ongoing global supply crunch.
And then there's the matter of raising the US debt ceiling.
Republicans have blocked Democrats' moves to lift the borrowing limit and Treasury Secretary Janet Yellen has warned the US government will run out of cash to meet its obligations by October 18, so the race is on to avert what many say could be a catastrophic default.
Observers say that while the row is merely political brinkmanship, the fact that the deadline is so close is making waves on trading floors.
- Sagging sentiment -
Government data released before Wall Street opened showed US jobless claims ticking up for the third week in a row, though the increases appeared to be moderating and they were nowhere near their levels earlier in the pandemic.
UK car production slumped 27 percent in August from a year earlier, in part due to tight supplies of semiconductors, industry data showed.
The severity of the supply issue was exemplified by carmaker Opel's announcement Thursday that it will close one of its plants until early 2022 owing to the global microchip shortage that has held back production.
German sentiment remains dogged by fears that talks to form a government will prove long and protracted after Chancellor Angela Merkel's conservatives lost to the Social Democrats.
In Asia, sentiment was dampened by news that China's factory activity contracted in September for the first time since February 2020 as the country faces an energy crunch that sparked power outages.
- Key figures around 2035 GMT -
New York - Dow: DOWN 1.6 percent at 33,843.92 (close)
New York - S&P 500: DOWN 1.2 percent at 4,307.54 (close)
New York - Nasdaq: DOWN 0.4 percent at 14,448.58 (close)
London - FTSE 100: DOWN 0.3 percent at 7,086.42 (close)
Frankfurt - DAX: DOWN 0.7 percent at 15,260.69 (close)
Paris - CAC 40: DOWN 0.6 percent at 6,520.01 (close)
EURO STOXX 50: DOWN 0.8 percent at 4,048.08 (close)
Tokyo - Nikkei 225: DOWN 0.3 percent at 29,452.66 (close)
Hong Kong - Hang Seng Index: DOWN 0.4 percent at 24,575.64 (close)
Shanghai - Composite: UP 0.9 percent at 3,568.17 (close)
Euro/dollar: DOWN at $1.1575 from $1.1598 at 2100 GMT on Wednesday
Pound/dollar: UP at $1.3471 from $1.3427
Euro/pound: DOWN at 85.91 pence from 86.38 pence
Dollar/yen: DOWN at 111.24 yen from 111.96 yen
Brent North Sea crude: DOWN 0.2 percent at $78.51 per barrel
West Texas Intermediate: UP 0.2 percent at $74.98 per barrel