Global stocks remain tentative as US government shutdown drags into day 10

Global stocks stayed steady on Friday as the US government shutdown stretched into its tenth day, sending Treasury yields lower and leaving traders scrambling for clues on the economy.

Futures on the S&P 500 and Nasdaq 100 ticked down slightly, while contracts tied to the Dow Jones Industrial Average added 22 points. This comes a day after the S&P 500 and Nasdaq Composite both closed in the red, easing off their all-time highs.

The Dow was pacing for a 0.9% weekly drop, while the S&P 500 was still set to post a 0.3% gain and the Nasdaq looked on course for a 1.1% weekly advance, according to data from CNBC.

The stalemate in Washington shows no signs of easing after the Senate failed for the seventh time to pass a stop-gap bill to reopen the government last night. Now, both the Republicans and the Democrats remain at odds, and negotiations appear frozen.

Traders are still pricing in a 95% chance of a 25-basis-point rate cut by the Federal Reserve at its October meeting, but the odds for another cut in December have plunged to 80%, when it was at 90% last week.

Bond yields plunge as global markets remain at stalemate

Meanwhile, the 10-year US Treasury yield dropped more than 3 basis points to 4.11%, while the 2-year slipped over 1 basis point to 3.581%. The 30-year Treasury yield fell more than 4 basis points to 4.689%.

Each basis point equals 0.01%, and yields move opposite to prices. The lack of government data during the shutdown only deepened the pressure on the bond market.

In Europe, stocks opened mixed. The Stoxx 600 was flat 20 minutes into trade, with most sectors edging up. Thursday’s session had ended lower as investors weighed new deals and political uncertainty in France.

Defense stocks dropped, with the Stoxx Europe Aerospace and Defense index down 0.7%. Traders also monitored news of a fragile peace deal in the Middle East that U.S. President Donald Trump helped broker.

The impact of Beijing’s export measures added to volatility. China’s decision to impose fresh controls on rare earth minerals rattled markets, given their importance in defense equipment and consumer tech.

Mining stocks took the hit, dragging the Stoxx Europe Basic Resources index down 1.2%. The move reversed earlier gains this week when the European Union announced higher tariffs on imported steel.

Asian indexes, global currencies and commodities trade sideways

Asia-Pacific trading was choppy. In Tokyo, the Nikkei 225 shed 1.01% to close at 48,088.8, while the Topix sank 1.85% to 3,197.59. In Seoul, the Kospi surged 1.73% to 3,610.6 after a holiday break, with the smaller Kosdaq adding 0.61% to 859.49. Australia’s ASX/S&P 200 slipped 0.13% to 8,958.3.

In Hong Kong, the Hang Seng Index lost 1.84%, while mainland China’s CSI 300 fell 1.97% to 4,616.83.

Japan’s yen has gained 0.2% to 152.7 per dollar but is still on track for a 3.5% weekly loss, its worst since October last year, as of press time.

The dollar rose 0.27% to 153.09 yen, after touching 153.23, the highest since February 13. The euro weakened 0.61% to $1.1555, hitting $1.1545, its lowest since August 5. The dollar index climbed 0.62% to 99.47, its strongest since August 1.

In commodities, Brent crude dropped 1% to $64.56 a barrel at 10:16 GMT, while West Texas Intermediate fell 61 cents to $60.90. In crypto, Bitcoin slipped 1.93% to $120,578.

Precious metals pushed higher, with spot gold surging by 0.5% to $3,992.97 an ounce at press time, after hitting a record $4,109 on Wednesday. US gold futures for December gained 0.8% to $4,005.30. Platinum advanced 0.6% to $1,628.94, while palladium jumped 1.9% to $1,438.47, both set for weekly gains, according to CNBC’s data.

“Markets are trying to balance a few things because we are navigating a little blind because of the government shutdown,” Fundstrat’s Tom Lee said Thursday.

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