US Stock Futures, Dollar Decline on US Shutdown: Markets Wrap

(Bloomberg) — US stock futures and Treasuries slipped as the first government shutdown in nearly seven years began, disrupting one of the nation’s biggest employers and threatening a temporary blackout in economic data.

Contracts on the S&P 500 fell 0.8% as traders reduced risk after the benchmark’s strongest September in 15 years. The dollar extended its slide for a fourth day. Treasuries were little changed after paring earlier losses. Gold sustained its record rally.

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The US government shut down after a midnight funding deadline as President Donald Trump and Congressional Democrats clashed over health-care spending. With key economic reports on hold, traders fear the loss of visibility will leave markets in the dark on the outlook for monetary policy.

The immediate reports at risk are Thursday’s weekly jobless claims and the Oct. 3 release of September’s nonfarm payrolls.

“If we didn’t get the data, we didn’t get the jobs report, even further we didn’t get the inflation report, I think that would definitely become a real risk,” Hebe Chen, market analyst at Vantage Markets, said on Bloomberg Television. “And that risk I have to say the market is yet to price in at this stage.”

The Congressional Budget Office estimates that about 750,000 employees will be furloughed at a cost per day of $400 million in lost compensation. That in turn has the potential to affect spending and may have a negative impact on the economy.

The shutdown will likely end when enough Democrats accede to a short-term funding bill that allows for health care negotiations and sets up another deadline later this fall, said Sarah Bianchi, a strategist at Evercore ISI, in a note late Tuesday.

“At this point, we think it is likely that the shutdown is relatively short-lived, one to two weeks,” she wrote. “We don’t see major macroeconomic implications of a shutdown, as long as it lasts less than a few weeks like all the prior shutdowns.”

Corporate News:

Nike Inc.’s turnaround efforts are starting to pay off as the world’s largest sportswear company realigns the business around specific sports such as running and basketball. Pfizer Inc. secured a reprieve from Trump’s long-threatened tariffs on the pharmaceutical industry Tuesday by agreeing to slash some of its drug prices by up to 85% and selling directly to the American public. European pharma stocks rose. Warren Buffett’s Berkshire Hathaway Inc. is nearing a deal to acquire Occidental Petroleum Corp.’s petrochemical business for about $10 billion. Mexican billionaire David Martinez voted against the decision by Banco Sabadell SA’s board to reject BBVA SA’s €17 billion ($20 billion) takeover bid, saying a merger would spark a stock rally. Qualcomm Inc. said a Delaware court dismissed Arm Holdings Plc’s last remaining legal claim against the chipmaker, handing the US company a victory in their long-running dispute. Some of the main moves in markets:

Stocks

The Stoxx Europe 600 rose 0.2% as of 9 a.m. London time S&P 500 futures fell 0.8% Nasdaq 100 futures fell 0.9% Futures on the Dow Jones Industrial Average fell 0.7% The MSCI Asia Pacific Index was little changed The MSCI Emerging Markets Index rose 0.4% Currencies

The Bloomberg Dollar Spot Index fell 0.1% The euro rose 0.1% to $1.1750 The Japanese yen rose 0.5% to 147.11 per dollar The offshore yuan was little changed at 7.1263 per dollar The British pound rose 0.2% to $1.3467 Cryptocurrencies

Bitcoin was little changed at $114,556.2 Ether fell 1.1% to $4,147.45 Bonds

The yield on 10-year Treasuries was little changed at 4.15% Germany’s 10-year yield advanced three basis points to 2.74% Britain’s 10-year yield advanced three basis points to 4.73% Commodities

Brent crude rose 0.6% to $66.41 a barrel Spot gold rose 0.5% to $3,879.43 an ounce This story was produced with the assistance of Bloomberg Automation.

–With assistance from Anand Krishnamoorthy.

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