Key momentsSign up for our daily business newsletter hereShutdown could be ‘more disruptive than usual’
Jerome Powell, the Federal Reserve chair
JIM WATSON/GETTY IMAGES
The US government shutdown “could prove longer and more disruptive than usual”, analysts at Jefferies warned.
The longest previous shutdown, during the last Trump administration, lasted 35 days and was estimated to have cost the US economy $3 billion, according to the Congressional Budget Office.
Besides halting the release of Friday’s closely watched September non-farm payroll report, the shutdown could affect critical data in the weeks ahead, including inflation and GDP data, creating a vacuum ahead of the Federal Reserve’s rate-setting meeting at the end of October.
Jefferies also warned of a freeze on regulatory activity at agencies such as the Securities and Exchange Commission, the Food and Drug Administration and the Environmental Protection Agency, delaying IPOs, drug approvals, and environmental permits.
Jitters over US jobs market
South Korea’s Kospi rose 0.9 per cent despite wider weakness in Asian markets
AHN YOUNG-JOON/AP
Gold struck a fresh record high and Asian stocks wavered after the deadline passed for a US government shutdown that is expected to delay the release of crucial jobs data.
Agencies warned that the shutdown would halt the release of the closely watched September employment report on Friday and lead to the furlough of 750,000 federal workers at a daily cost of $400 million. It raises concerns about the impact on the already slowing US labour market.
Normally, markets shrug off shutdowns but this time is different, with the delay to the non-farm payrolls data and President Trump’s threat to permanently lay off workers. It will increase concerns at the Federal Reserve about the jobs market and the chance of a US interest cut in October has now risen to 94.6 per cent, according to the CME Fedwatch tool, up from 90 per cent a day earlier.
Gold climbed to $3,875 an ounce, hitting a record high for the third straight session. Japan’s Nikkei dropped 0.9 per cent and Australia’s ASX dipped 0.2 per cent, but South Korea’s Kospi rose 0.9 per cent. Chinese markets are closed for the week-long National Day holidays.
The FTSE 100 is forecast to open down 0.02 per cent after hitting a record closing high yesterday for its best quarterly percentage gain since the last three months of 2022. The index closed up 0.54 per cent at 9,350.43, and rose 6.7 per cent over the past quarter. Both S&P 500 futures and Nasdaq futures dropped 0.5 per cent.