The U.S. government shutdown impacts the market, gold breaks through $3,900 to reach a new high, U.S. stock futures and Japanese stocks decline

At noon, the U.S. government will shut down again since 2019, and global financial markets are facing new uncertainties.

During the Asian trading session, U.S. stock futures for the S&P 500 and Nasdaq both fell by about 0.5%.

Safe-haven sentiment pushed COMEX gold to break through $3,900 per ounce, setting a new record high. Spot gold rose 0.2% to $3,865 per ounce, once again approaching the historical high of $3,871.45 set on Tuesday.

The latest development is that after the deadline at midnight Eastern Time on Tuesday (23:59), the government will officially shut down. Due to Congress's failure to pass a temporary funding bill, U.S. federal government agencies have begun to implement an "orderly shutdown."

One of the most direct impacts of this government shutdown is that data such as the non-farm payroll report, originally scheduled for release on Friday, will be delayed, causing investors and policymakers to lose a key indicator for assessing economic health. As a result, market expectations for a rate cut by the Federal Reserve in October have risen from 90% a day ago to 96%.

Mixed Performance in Asian Markets

The news of the U.S. government shutdown triggered a chain reaction in Asian markets, with safe-haven sentiment noticeably rising. Japan's Nikkei 225 index fell 1% today after a strong rally in the previous quarter, and the Topix index also dropped 1.69%. Australia's S&P/ASX 200 index slightly declined by 0.4%.

However, the performance of Asian markets was not uniformly negative. The Korea Composite Stock Price Index (Kospi) rose 0.7%, continuing its 11.5% gain from the previous quarter. Data showed that South Korea's exports in September recorded the fastest growth in 14 months, providing support for the market.

It is worth noting that the Chinese A-shares and Hong Kong stock markets are closed due to the National Day and Mid-Autumn Festival holidays.

Safe-Haven Assets and Currency Market Dynamics

Against the backdrop of rising uncertainty, various assets performed differently. In addition to the strengthening gold prices, the U.S. dollar index remained stable at 97.84 after three consecutive days of decline. The dollar rose 0.1% against the yen to 148.1, with the market reacting mildly to a Bank of Japan survey showing corporate inflation expectations above the 2% target.

The U.S. Treasury market remained stable during the Asian trading session. The benchmark 10-year U.S. Treasury yield was flat at 4.150%.

In terms of commodities, oil prices stabilized after two consecutive days of decline. Investors are weighing OPEC+'s potential plans to increase production next month against the prospect of a decline in U.S. crude oil inventories.

Data Vacuum and Federal Reserve Outlook

The "data vacuum" caused by the U.S. government shutdown is forcing the market to reassess the Federal Reserve's policy outlook. With the absence of the non-farm payroll report, investors may pay closer attention to the ADP National Employment Report, which is expected to show a moderate increase of 50,000 jobs in the private sector.

Kyle Rodda, a senior analyst at Capital.com, pointed out that typically, government shutdowns have little impact on the market; for instance, during the more than month-long shutdown from 2018 to 2019, Wall Street even rose. However, he added that the current market faces two issues: the delayed release of key employment data and "President Trump threatening to permanently lay off workers, which could turn the government shutdown into a small-scale labor market shock."

This uncertainty has significantly raised market expectations for a Federal Reserve rate cut. Futures market data shows that in addition to a 96% probability of a rate cut in October, the likelihood of another cut in December has also reached about 74%