On September 30, shares in Asia experienced a slight uptick as investors navigated the potential implications of a looming U.S. government shutdown. This uncertainty comes at a time when gold prices continue their upward trajectory, reaching record highs. Market participants are particularly concerned about the potential delay in the release of crucial jobs data due to the ongoing budget negotiations.
The Australian dollar gained ground, rising by 0.5% against the U.S. dollar to $0.6605. This increase followed the Reserve Bank of Australia's decision to maintain its policy rates at 3.60%, as anticipated by analysts. The central bank cited that recent economic data suggested inflation could be higher than previously forecast, contributing to the overall uncertainty in the economic outlook.
In the commodities market, oil prices fell due to expectations of increased production from OPEC+. U.S. crude dropped by 0.6% to $63.10 per barrel, while Brent crude slid to $67.53 per barrel, marking a 0.7% decline. These fluctuations come amid broader economic concerns, including a potential slowdown in manufacturing activity in China.
Data released indicated that China's manufacturing activity contracted for the sixth consecutive month in September, with the Purchasing Managers' Index (PMI) rising slightly to 49.8 from 49.4 in August. This figure remains below the critical 50-mark, which separates expansion from contraction, signaling that producers are awaiting further stimulus measures to boost domestic demand.
As the threat of a U.S. government shutdown looms, analysts warn that it could hinder the Federal Reserve's ability to make informed decisions regarding interest rate cuts. The upcoming JOLTS report, which tracks job openings, is set to be released, but its publication is now uncertain. The report is vital as it provides insights ahead of the September employment report due later in the week.
Ray Attrill, head of FX research at National Australia Bank, noted in a podcast, "If we know we're not going to get the payrolls numbers, it will just shine a brighter spotlight on the numbers that we do have," emphasizing the market's need for timely economic data.
The primary focus for investors remains on the future trajectory of U.S. interest rates, with many believing that substantial cuts could be on the horizon. Capital.com analyst Kyle Rodda remarked that the shutdown may delay the release of important economic indicators, including the critical non-farm payrolls report.
If no agreement is reached, a U.S. government shutdown could begin as soon as Wednesday, coinciding with the implementation of new tariffs on various goods, including heavy trucks and patented drugs. The White House recently adjusted tariffs on furniture and cabinets, which are set to take effect on October 14.
Amidst the economic and trade uncertainty, gold prices soared to an all-time high of $3,866.99. This rise can be attributed to investors seeking safe-haven assets in a volatile market environment. Meanwhile, in the broader European market, Euro Stoxx 50 futures dipped by 0.09%, while German DAX futures fell by 0.05%.
In the cryptocurrency arena, bitcoin remained relatively stable at $114,289.88, while ether experienced a slight downturn, decreasing by 0.7% to $4,200.85. As global markets react to shifting economic indicators, investors are advised to stay informed and prepared for potential market volatility.
Reporting by Rocky Swift; Editing by Jamie Freed and Clarence Fernandez. Our Standards: The Thomson Reuters Trust Principles.
