US Stocks Hit Records Despite Lockdown – Nasdaq up 0.4%
All three of the major US stock indices pushed higher to record levels in trading yesterday despite the US government shutdown rolling into a second day, with no sign of an agreement between the two political parties anytime soon. The Dow closed up 0.17% at 46,519, the S&P up just 0.06% at 6,715, and the Nasdaq up 0.39% at 22,844. Treasury yields were mixed as the first scheduled data update – Weekly Unemployment Claims – was missed due to the lockdown, with the 2-year up 0.2 of a basis point to 3.537% and the 10-year down 1.7 basis points to 4.081%, while the dollar appreciated, the DXY up 0.20% to 97.90. Oil prices fell to 4-month lows as oversupply issues continued to weigh, Brent down 1.56% to $64.33 and WTI down 1.72% to $60.72 a barrel. Gold punched higher to yet another record level before ultimately settling lower, down 0.28% at $3,856.01 on the New York close.
US Employment Numbers in Focus
Key US employment data is in focus for traders in the coming sessions, as we are under the strange situation of not knowing the release date and time due to the US government shutdown. The last job update on Wednesday pointed again to a faltering jobs market when the ADP Non-Farms number came in at -30k against an expected +53k print. This helped lock in expectations for a Fed rate cut in the coming weeks and increased traders’ anticipation of another weak Non-Farms Payroll number today, or upon release once the government is back in operation. Markets are likely to move strongly around the event, with expectations for a 52k increase in the Non-Farm Payrolls priced in alongside a 4.3% Unemployment Rate and a 0.3% month-on-month increase for the Average Hourly Earnings. If that data – when we do see it – comes in weaker again, then expect the market to start looking for even more Fed rate cuts in the coming months and the dollar to take a big hit.
Economic Calendar in Doubt Today
Global financial markets are likely to be left in a bit of limbo towards the end of the trading day today, as there is a strong possibility that the key US Non-Farms numbers will not be released as planned due to the government shutdown. Despite the shutdown, Asian markets look set to open on the front foot after another record day on Wall Street overnight. There will be a strong focus on Japanese markets, with Bank of Japan Governor Kazuo Ueda scheduled to speak in the morning ahead of this weekend’s prime ministerial vote. We also hear from key central bankers during the European session, with the ECB’s Christine Lagarde and the Bank of England’s Andrew Bailey both due to speak in Amsterdam, but the real focus will be on the New York open and whether or not the US employment numbers are released.
