LONDON, Oct 1 (Reuters) - Wall Street futures and the dollar stumbled on Wednesday, while gold struck a record high as the U.S. government shut down much of its operations, possibly delaying the release of crucial jobs data that could muddy the interest rate outlook.
With no clear path out of the impasse over a funding deal, agencies warned the government shutdown would halt the release of a closely watched September employment report, opens new tab and lead to the furlough of 750,000 federal workers at a daily cost of $400 million.
S&P 500 futures and Nasdaq futures dropped about 0.5% each on Wednesday. Gold prices climbed to $3,895 an ounce, hitting a record high for a third straight session.
European shares bucked the global trend, with the pan-continental STOXX 600 (.STOXX), up 0.7%. Britain's FTSE 100 and Switzerland's SMI (.SSMI), outperformed, boosted by healthcare stocks which jumped on expectations they could avoid excessive U.S. import tariffs after President Donald Trump struck a deal with Pfizer (PFE.N), on prescription drug prices.
The healthcare sector has the third largest weighting in the STOXX 600.
"There's a lot of political risk in the healthcare sector but as you see this risk ease, investors will be buying," said Lars Skovgaard, senior investment strategist at Danske Bank.
"I think this could give some support to European shares over the next couple of days."
SHUTDOWN TO DELAY DATA
With Friday’s nonfarm payrolls report expected to be absent, investors may place greater weight on the ADP National Employment Report due later today. Forecasts are centred on a modest gain of 50,000 private-sector jobs.
"The general idea is that these things have a short-term impact, not a long-term one, and markets know it," said George Lagarias, chief economist at Forvis Mazars.
"The lack of data will mean we assume the trend we have will continue. If there is no evidence of a strong economic rebound then the chances are that the Fed will continue on its present course."
Futures now imply a 95% chance of a rate cut from the Federal Reserve in October, up from 90% from a day earlier, with around a 75% probability of another move in December.
Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., April 21, 2025. REUTERS/Brendan McDermid
Purchase Licensing Rights, opens new tab
Anthony Saglimbene, chief market strategist at Ameriprise, said that if the shutdown lingers, September inflation reports in mid-October could also be negatively affected.
"An extended period where the U.S. Bureau of Labor Statistics is not operating at full strength could affect data collection efforts for other reports, which may impact the quality of the data," he said in a note.
Japan's Nikkei (.N225), dropped 0.9% on Wednesday after an 11% surge the previous quarter. South Korean shares (.KS11), opens new tab rose 0.9%, adding to the 11.5% gain in the last quarter, after data showed its exports rose at the fastest pace in 14 months in September.
Taiwan's shares (.TWII), gained 0.6%. The island's top tariff negotiator said on Wednesday that Taiwan will not agree to a deal with Washington for half of all semiconductor production to take place in the U.S.
Chinese markets, including Hong Kong, were closed for a public holiday.
DOLLAR FALLS
In foreign exchange markets, the dollar index slipped for a fourth straight day and was last down 0.1% to 97.71.
The euro rose 0.1% to $1.1735, while sterling was up 0.3% at $1.3483.
The dollar was off 0.6% at 147.06 yen , after a Bank of Japan survey showed confidence among big Japanese manufacturers improved for a second quarter, heightening the chance of an interest rate hike as soon as this month.
In the Treasuries market, yields were steady in European morning trade. The benchmark U.S. 10-year Treasury yield was down 1 basis point at 4.137%, having risen 1 basis point the day before.
Oil prices fell further after two consecutive days of losses as investors weighed potential OPEC+ plans for a larger output hike next month.
U.S. crude was down about 0.4% at $62.14 a barrel, while Brent was 0.4% lower at $65.79.
Reporting by Samuel Indyk, Stella Qiu and Ankur Banerjee; Editing by Sam Holmes and Ed Osmond
