Stocks steady as US shutdown arrives Tuesday 11:00 BST. The dollar is trading at fresh seven-month lows as Washington's failure to pass a budget deal partially shuts down the US government for the first time in 17 years. But US index futures are up and global equities are generally firmer, having already pulled back over the past week or so in anticipation of the political gridlock. Analysts reckon the mild reaction to the shutdown news - the S&P 500 closed on Monday just 2.7 per cent below its record high - reflects a belief among many investors that any closure will be shortlived and its economic effect minimal. Furthermore, its impact may be alleviated by the Federal Reserve adjusting monetary policy accordingly - in other words, delaying the tapering of its quantitative easing programme in order to support growth. "More fiscal drag would tend to argue for easier Fed policy, which may go some ways to explaining why the equity pullback has been modest," said forex strategists at Citi. One complicating factor for the market's calculation of Fed intentions is the potential for a partial government data blackout. This could delay the publication of the crucial non-farm payrolls survey, due this Friday. Meanwhile, more pessimistic traders worry that the inability to reach a budget deal does not bode well for negotiations on the government debt ceiling, which if it is not raised within about two weeks could result in the biggest economy in the world technically defaulting. The market is deeply unsure how that would impact the US sovereign bond market and infect the global financial system - but for now those concerns appear to be on the back burner. The FTSE All-World index, which fell to a two-week low in the previous session, is up 0.2 per cent as Europe's Stoxx 600 adds 0.3 per cent and S&P 500 futures show the New York benchmark climbing 7 points to 1,688.5. The calmer mood is removing some haven premium from highly rated fixed income products, pushing 10-year Treasury yields up 4 basis points to 2.66 per cent. Benchmark Bund yields are up 2bp to 1.80 per cent after a purchasing managers" survey showed eurozone factory activity in September grew for a third month in a row. The euro is up 18 pips to an eight-month high of $1.3543 as worries about the political situation in Italy abate. Rome's 10-year borrowing costs are sliding 5bp to 4.53 per cent. The Asia-Pacific region rose 0.4 per cent, though trading was muted due to the closure of Hong Kong and China for holidays. Indeed, the mainland markets will be shut for the rest of the week. That left Japan and Australia to hog the limelight. In Tokyo, the Nikkei 225 received a lift from the closely watched Tankan survey, which showed the manufacturing sector humming at a six-year high in the third quarter. However, the Nikkei pared a chunk of its early gains to finish just 0.2 per cent higher after prime minister Shinzo Abe confirmed he would raise the country's consumption tax as planned. The yen is up 38 pips to Y97.83 versus a generally soft greenback. The dollar index, which measures the buck against a basket of its peers, is slipping 0.3 per cent to 80.01, having earlier traded below 80.00 for the first time since February. Gold is gaining $5 to $1,332 a troy ounce. The Australian dollar, in particular, is making headway against its US namesake. News that August retail sales beat forecasts and private home sales rebounded provided support for the Aussie. It got an additional lift after the Reserve Bank of Australia left interest rates unchanged but confounded some in the market by not giving an explicit indication that there was room to ease policy further. The Aussie is now up 1.2 per cent to $0.9426, but the lack of RBA dovishness hit the Sydney stock market, with the S&P/ASX 200 slipping 0.2 per cent. Initial softness in industrial commodities possibly contributed to the underwhelming performance from the resource-sensitive Sydney bourse. Copper is off 0.3 per cent to $3.31 a pound and Brent crude is slipping 35 cents to $108.02 a barrel. Additional reporting by Patrick McGee in Hong Kong