Overnight roundup courtesy of Spreadex – 30/09/13

Equity investors find themselves attacked on more than one front this morning, with the U.S. budget, Italian politics and China being reason enough for an early run to the exit. Shares across Europe are set to open significantly lower in light of the developing news flow. 

While this combination of news flow is concerning, the price action following the open will be critical in determining near-term momentum. If, for example, prices are supported and buyers step in, investors will be harder to part from their stock than if the contrary occurred. But either way, Investors have been caught a little off guard.

 Unsurprisingly, safe haven assets have been the destination of a lot of the cash leaving risk assets. High quality fixed income, Swiss francs and dollars have been in demand against this sell-off and will continue to be so until a catalyst can stabilise or reverse sentiment. 

What certainly won’t help equity bulls is how far valuations are stretched already.