- Futures on Wall Street are fully reversing losses from the Asian session. The US500 is gaining around 0.24% just over two hours before the session closes, while the US100 is up 0.42%.
- The declines seen after yesterday's close, which continued throughout the Asian session, can be attributed to uncertainty surrounding the potential U.S. government shutdown. Currently, the Republican Party is unable to reach an agreement with the Democratic Party regarding a new funding bill. The Democrats want more funding for healthcare included in the bill, while the Republicans are pushing for a clean extension of last year’s fiscal spending through November.
- A government shutdown means many federal agencies may cease operations. Up to 750,000 public service employees are expected to be placed on temporary furlough. Nevertheless, there are suggestions that Donald Trump may use the shutdown as an opportunity to lay off staff from the Department of Justice or reduce the number of government officials in general.
- The ADP employment report showed a drop of 32,000 jobs in September, marking the worst private employment report since January 2021. Furthermore, the August data was revised downward. As a result, Friday’s NFP data may not be released due to the Labor Department not operating during the shutdown.
- Markets are now anticipating that, following the ADP report and a potentially prolonged shutdown, the U.S. unemployment rate for October could rise to 4.7%. Such an outcome would strongly signal the need for deeper interest rate cuts by the Fed.
- The U.S. dollar weakened broadly today due to shutdown risks, although a shutdown does not directly impact the government's ability to meet its debt obligations. However, a prolonged shutdown could lead to a downgrade in GDP growth forecasts for Q4. Despite this, the EURUSD pair retreated from around 1.1770 to below 1.1730 by the end of the session.
- Fitch Ratings noted that the government shutdown has no immediate impact on the U.S. credit rating outlook, which remains at AA+ with a stable outlook.
- Gold continues its upward trajectory, nearly surpassing $3,900 per ounce. It has gained over 16% in Q3 alone, making it one of the best quarterly returns in history.
- The U.S. ISM Manufacturing Index rose to 49.1 points, in line with expectations, up from 48.7 points. There’s a recovery in the employment sub-index, although it remains below 50. Meanwhile, the prices sub-index slightly declined but stays extremely elevated above 60. The new orders sub-index fell back below 50 after a temporary spike in August.
- U.S. crude oil inventories rose by 1.79 million barrels, exceeding expectations and diverging from yesterday’s API report, which unexpectedly showed a 3.7 million barrel decline. Despite the shutdown of many DOE operations, the EIA plans to continue publishing data and collecting survey responses.
- In Germany, the PMI came in at 49.5 versus the expected 48.5, suggesting the economy is performing slightly better than forecasted. In France, however, the PMI fell to 48.2 (expected 48.1), a notable drop from the previous reading of 50.4.
- Eurozone CPI inflation in September matched analysts’ expectations. Core inflation held at 2.3%, indicating that price pressures remain under control and aligned with the European Central Bank’s targets. As a result, the ECB may see this as evidence that current monetary policy is well-calibrated and that no immediate tightening is necessary.
- Poland’s PMI surprised positively, coming in at 48.0 (expected 46.4), signaling stabilization in industrial activity. Though still below the 50-point threshold, the manufacturing sector in Poland is performing better than previously anticipated.
- Bitcoin is up nearly 3% today, approaching the psychological level of $120,000. Ethereum is also rallying, gaining almost 4% and breaking through $4,300.
- Nike released its Q3 financial results, effectively kicking off the new earnings season. While the figures are not stellar in terms of growth, they beat investor expectations, possibly signaling a shift in the company’s outlook. Nike reported revenue of $11.72 billion, up 1% year-over-year. Profit came in at $727 million, down 31% compared to the same period last year, along with a decline in margins. However, the market had anticipated weaker results due to issues in China and tariffs.
- Netflix shares are down 2%, although they were down as much as 5% pre-market after Elon Musk called on users to cancel their subscriptions for the sake of their mental health.
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