Morning wrap (01.10.2025)

Futures on major indices in the US and EU entered a sharp correction as investor sentiment deteriorated following the shutdown of US federal agencies (US500, U100, EU50: -0.3%).

The first government shutdown since 2018 began after the US Senate rejected the Democrats’ spending bill, which in turn had not supported the Republicans’ proposal in Congress, mainly due to disagreements over healthcare spending. The BLS announced on Monday that it will not publish Friday’s NFP data during the shutdown.

Austan Goolsbee said he does not want to cut rates preemptively, hoping that the current inflation is temporary. However, the Chicago Fed President expressed hope that the latest inflationary episode will not turn into lasting pressure.

Sentiment in the Asia-Pacific region is mixed, with activity subdued by the market holiday in China due to National Day. Japan’s Nikkei is falling for the third session in a row (JP225: -0.6%) in reaction to the BOJ survey, which showed improved sentiment among regional manufacturers, increasing expectations of a rate hike. AU200.cash and SG20.cash gained 0.1% and 0.3% respectively. India’s Nifty 50 rebounded 0.3% after yesterday’s correction, while South Korea’s Kospi (+0.8%) was also lifted by tech stocks.

Japan’s manufacturing PMI for September came in slightly above expectations (48.5 vs. Bloomberg consensus 48.4, previous 49.7), but also pointed to the fastest pace of production decline in six months. Business activity fell most sharply among intermediate goods producers. Companies reported weaker orders as customers cut inventories amid softer demand from China and the US.

Australia’s manufacturing PMI unexpectedly dropped from 51.6 to 51.4, pointing to a slowdown in sector growth amid the first decline in new orders since June, as demand weakened partly due to price pressures from rising raw material and fuel costs.

The dollar index began its fourth straight losing session (USDIDX: -0.15%), weakening the most against the yen (USDJPY: -0.2%) and the euro (EURUSD: +0.2% to 1.1757). The weakest G10 currency, however, is the Australian dollar, which is correcting after its recent rebound driven by hawkish RBA expectations (AUDUSD: -0.2%).

Gold continues its rally (+0.1% to $3,863/oz) amid political turbulence in the US, with silver following suit (+0.7% to $47.01/oz). Palladium (-1.4%) and platinum (-0.3%), however, are correcting down.

Oil prices are stabilizing after two days of declines (OIL: +0.1%), with downside pressure from increased OPEC production offset by expectations of falling US inventories. NATGAS is up 0.75%.

Bitcoin is up 0.4% to $114,780, while Ethereum is down 0.1% to $4,154.