Stocks inch upward as markets consider effects of potential US shutdown

Global stock markets saw modest gains as investors assessed the implications of a U.S. government shutdown that began on October 1. The MSCI global stock index rose by 0.3%, with European stocks reaching record highs. U.S. futures increased between 0.2% and 0.4%, while Asian tech shares benefited from partnerships involving South Korean firms Samsung and SK Hynix with OpenAI.

Concerns over the shutdown have sparked fears of delays in crucial economic indicators, including the non-farm payrolls report. This uncertainty has prompted investors to expect potential Federal Reserve rate cuts, with an estimated 91.4% likelihood of a 25-basis-point cut in the upcoming meeting and predictions of two cuts by the year’s end. Concurrently, the U.S. dollar depreciated to a one-week low, while gold prices surged to a record high of $3,895.09 before settling at $3,880. U.S. Treasury yields fell, with the two-year yield reaching a two-week low.

In the Gulf region, stock performance varied: Saudi Arabia’s benchmark index rose by 0.1% due to gains from the Saudi Arabian Mining Company. Dubai’s DFM General Index increased by 0.5%, driven by advancements from Emaar Properties and Spinneys. In contrast, Abu Dhabi’s index dipped 0.1%, influenced by a significant decline in ADNOC Distribution, and Qatar’s benchmark fell by 0.8% amid a drop in Qatar National Bank shares. Oil prices remained stable as investors considered OPEC+ production hikes and the U.S. shutdown’s effects on global demand.

While global markets demonstrated resilience, the U.S. government shutdown remains a critical concern, influencing economic data releases and Federal Reserve policy decisions.