SYDNEY: Wall Street futures slipped, gold struck a record high, and Asian stocks wavered on Wednesday, as the deadline passed for a US government shutdown that is expected to delay the release of crucial jobs data and muddy the interest rate outlook.
With no clear path out of the impasse, agencies warned that the government shutdown would halt the release of the closely watched September employment report and lead to the furlough of 750,000 federal workers, incurring a daily cost of $400 million.
Both S&P 500 futures ESc1 and Nasdaq futures NQc1 dropped 0.5%. Gold prices XAU= climbed to $3,875 an ounce, hitting a record high for third straight session. European futures STXEc1 were little changed.
With Friday’s non-farm payrolls report 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.
"Typically, a shutdown is immaterial for markets. In fact, the 2018-2019 shutdown, which lasted for over a month, actually saw Wall Street rise," said Kyle Rodda, a senior analyst at Capital.com.
Rodda added that the issues for markets are twofold, with one being the delay of the release of the non-farm payrolls data. The other one is "US President Trump has also threatened to permanently lay off workers, which could turn the shutdown into a mini-labour market shock," he said.
Futures now imply a 96% chance of a rate cut by the Federal Reserve in October, up from 90% the day before, with around a 74% probability of another move in December.
Anthony Saglimbene, chief market strategist at Ameriprise, said in a note that if the shutdown lingers, the September inflation reports, due in mid-October, could also be negatively affected.
"An extended period where the US 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.
On Wednesday, Japan's Nikkei N225 dropped by over 1%, following an 11% surge in the previous quarter. South Korean shares KS11 rose 0.6%, 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 1.3%. The island's top tariff negotiator stated on Wednesday that Taiwan will not agree to a deal with Washington that would require half of all semiconductor production to take place in the US.
Chinese markets, including Hong Kong, are closed for a public holiday.
Overnight, Wall Street managed to end the quarter on a positive note, closing higher. Data showed that US job openings increased marginally in August, while hiring declined, and consumer confidence fell by more than expected.
In foreign exchange markets, the dollar index =USD held steady after three straight days of losses and was last at 97.84. It was flat at 147.98 yen JPY=EBS, reacting little to a Bank of Japan survey showing Japanese companies expect consumer prices to rise an average 2.4% a year from now, above the central bank's 2% target.
In the Treasuries market, yields were steady in Asia. The benchmark US 10-year Treasury yield US10YT=TWEB was flat at 4.1561%, having risen 1 basis point overnight.
Oil prices steadied on Wednesday after two consecutive days of losses as investors weighed potential OPEC+ plans for a larger output hike next month against the prospect of shrinking inventories in the US.
US crude CLc1 inched up 0.1% to $62.46 a barrel, while Brent LCOc1 was 0.2% higher at $66.16.
