SYDNEY/LONDON — Global stocks rose on Monday while the dollar eased as investors braced for a possible shutdown of the US government, which could in turn delay publication of the September payrolls report and a raft of other key data.
Gold roared to another high, powered by the dip in the dollar and by investor concerns about the possible ramifications of a US government shutdown.
President Donald Trump will meet with the top Democratic and Republican leaders in Congress later on Monday to discuss extending government funding. Without a deal, a shutdown would begin from Wednesday, which is also when new US tariffs on heavy trucks, patented drugs and other items go into effect.
A protracted closure could leave the Federal Reserve flying blind on the economy when it meets on October 29.
“If the shutdown lasts beyond the Fed meeting, the Fed will rely on private data for its policy decisions,” analysts at BofA wrote in a note. “On the margin, we think this may lower the likelihood of an October cut, but only marginally.”
The MSCI All-World index was up 0.16 percent, while in Europe, the STOXX 600 rose 0.3 percent, heading for a gain of 1.1 percent in September, marking its third straight month of increases.
Meanwhile, markets imply a 90 percent chance of a Fed cut in October, with around a 65 percent probability of another in December.
The BofA analysts estimated a shutdown would subtract only a slight 0.1 percentage point from economic growth for every week it lasted, while noting the impact on financial markets had been minimal in the past.
They cautioned that should the government use the closure to lay off workers permanently, then it could have a more meaningful impact on payrolls and consumer confidence.
There is also much uncertainty about what might happen at a meeting of US generals and admirals in Quantico, Virginia, on Tuesday, called by Defense Secretary Pete Hegseth, which Trump will reportedly attend.
Otherwise, analysts expected equities to be supported by buying for the new quarter, which historically tends to be a positive one for stocks. The S&P 500 has gained 74 percent of the time in fourth quarters.
S&P 500 futures gained 0.5 percent, while Nasdaq futures were up 0.6 percent, having eased modestly last week.
In bond markets, 10-year Treasuries found support at 4.16 percent, having been pressured last week by a run of upbeat US economic data that led investors to pare back expectations for how low Fed rates might ultimately go.
