Global Markets Update: Shutdown Pressures, Commodity Swings, and Strong Quarter-End Gains

                                                    Source: Krish Capital Pty Ltd

Index Update

The U.S. government shutdown is set to furlough about 750,000 federal workers, costing an estimated $400 million per day, while key services such as Friday’s jobs report could be delayed. Traders are turning to ADP’s employment data for guidance in the meantime. Despite the political impasse, Wall Street ended September and the third quarter on a strong note Tuesday, with the Dow up 0.18%, the S&P 500 gaining 0.41%, and the Nasdaq rising 0.3%. After hours, Nike shares jumped 4.5% on better-than-expected quarterly earnings and revenue.

Market Movers

On Tuesday, the top gainers were Zura Bio Limited (+44.82%), followed by Innovation Beverage Group Limited (+39.37%). On the contrary Epsium Enterprise Limited (-56.53%), and Erayak Power Solution Group Inc. (-52.45%) declined the most the same day.

Commodities Update

Oil prices extended their decline, with WTI falling near $62 and Brent below $66 per barrel, both hitting three-week lows. The drop comes as OPEC+ considers faster supply hikes of 500,000 barrels per day over three months, despite warnings of oversupply from the IEA and TotalEnergies. Pressure also mounted from record U.S. production of 13.6 million barrels per day, while Russia’s limited fuel export restrictions offered only minor support.

In contrast, gold surged above $3,890 per ounce to a record high, driven by safe-haven demand amid the U.S. government shutdown. The political gridlock threatens prolonged disruption, delays in key economic data, and risks to federal jobs. With signs of a cooling labor market, markets are pricing in an imminent Fed rate cut in October and a high likelihood of another in December.

Macro Updates

U.S. Mortgage Applications Slide as Rates Rebound

U.S. mortgage applications fell 12.7% in the week ending September 26, marking the sharpest drop in nearly a year and reversing much of the recent 42% surge. Refinance applications plunged 21%, while home purchase applications slipped 1%, as rising Treasury yields pushed benchmark mortgage rates higher. The average 30-year fixed-rate mortgage rose to 6.46% from 6.34%, ending a four-week decline. The Mortgage Bankers Association noted that the rebound in rates, driven by stronger economic data, curtailed refinancing opportunities, which are expected to remain limited this year.

Dollar Steadies Amid U.S. Government Shutdown Uncertainty

The dollar index hovered around 97.8 on Wednesday after three days of losses, as markets assessed the impact of the first U.S. government shutdown in nearly seven years. The funding deadlock, centered on Obamacare subsidies, threatens to furlough 750,000 federal workers at a cost of $400 million per day and could delay key data releases, including Friday’s jobs report. In the meantime, traders are looking to ADP employment figures for labor market insights.

Bonds Commentary

U.S. 10-year Treasury yields held near 4.15% on Wednesday as the government shutdown took effect after lawmakers failed to reach a funding deal. The closure could furlough hundreds of thousands of federal workers and delay key economic data ahead of the Fed’s late-October meeting, shifting focus to ADP’s payrolls report. Meanwhile, JOLTS data showed job openings rose slightly but hiring slowed in August, reinforcing signs of a cooling labor market and adding pressure on the dollar.

Futures Update

U.S. stock index futures declined on Wednesday following a government shutdown due to Congress failing to approve funding. As of early morning, Dow futures were down 0.4%, S&P 500 futures fell 0.6%, and Nasdaq futures slipped 0.6%. This drop came after major indices closed higher on Tuesday, capping September with strong gains, including a 7.8% rise in the S&P 500 for the third quarter.