Government Shutdown: What to expect next 01/10/2025

HOT stories for today

US market wrap:

• Markets advanced on Tuesday, wrapping up September in positive territory, the fifth consecutive month of gains. According to MarketWatch, it was the strongest “quiet” September in 15 years. Nvidia reached a record high, surpassing a $4.5 trillion market cap, while smaller players like CoreWeave also moved higher, benefiting from data center partnerships in the ongoing AI surge.
• At 12:01 a.m. on Wednesday, the U.S. government officially shut down after two failed attempts by the GOP-led Senate to pass a short-term funding bill. Democrats aim to leverage the measure to secure an extension of health care tax credits for millions of Americans.

Government Shutdown: What to expect next

• The U.S. federal government has entered its first partial shutdown in seven years after lawmakers failed to pass a funding bill by the fiscal year deadline. The standoff, driven in part by disputes over extending Obamacare subsidies, is expected to ripple across markets and daily life. While history shows that stocks often hold up or even rise during shutdowns, the immediate impact includes delayed economic data, such as Friday’s jobs report, stalled IPO approvals, and furloughs for hundreds of thousands of federal employees.
• However, essential workers continue to work without pay. Social Security, Medicare, Medicaid, mail delivery, and Amtrak services will continue, but benefit verification, inspections, and most national park operations will be suspended. Economists warn that a short closure may have limited economic effects, but a prolonged one could erode confidence, disrupt travel and safety oversight, and weigh on consumer spending.

Stocks on the move:

• Shares of Lithium Americas (LAC) jumped more than 34% in after-hours trading on Tuesday after U.S. Energy Secretary Chris Wright told Bloomberg the government plans to take a small stake in the company.
• Nike (NKE) reported an unexpected sales increase for its fiscal first quarter, lifting shares by more than 4% after the market close. However, the footwear giant still faces challenges in its turnaround strategy.
• UiPath (PATH) gained 10% on Tuesday and was trending on Stocktwits after unveiling partnerships with Nvidia, OpenAI, and Google. The company develops autonomous AI agents, and the new deals enable direct links with ChatGPT and Gemini tools.
• As the government moves into a shutdown, Pfizer (PFE) advanced by 6.83% after announcing a $70 billion investment in U.S. manufacturing and plans to provide discounted medicines through a new Trump-backed website.

Watchlist: NKE, PATH, LAC, INTC, CRWV, PFE, AAPL, NVDA

Today’s action

• Asia-Pacific markets traded mixed on Wednesday after Wall Street’s rally, with investors largely shrugging off the U.S. government shutdown. In Japan, the Bank of Japan released its third-quarter Tankan survey, a key gauge of corporate sentiment, while the Nikkei 225 slipped 1.16%. Markets in mainland China and Hong Kong were shut for a holiday.
• U.S. stock futures moved lower early Wednesday as traders weighed the implications of the shutdown: Dow futures fell 192 points (-0.41%), S&P 500 futures dropped 0.44%, and Nasdaq 100 futures lost 0.51%. The Labor Department confirmed that most operations will pause during the shutdown, meaning Friday’s September payrolls report will not be released. In its absence, Wednesday’s private-sector jobs reading from ADP is expected to take on greater market importance.

Bitcoin

• Bitcoin traded at $114,604 after dipping about 2% from overnight highs near $115,000, before staging a late-day rebound to $114,300, remaining little changed over the past 24 hours. Ether hovered above $4,100, down 1.3% in the same period. While government shutdowns rarely have a direct impact on markets, the crypto sector may face indirect pressure.
• A prolonged closure would stall investor data collection, delay progress on the CLARITY Act, halt SEC rulemaking and spot ETF approvals, and leave traders without key Fed metrics, such as inflation and jobs figures, forcing them to navigate markets with limited guidance.
  Watchlist: Bitcoin: 98 000-125 000, Ethereum: 4000-4980, Solana: 180-240
   

Forex

• EUR/USD hovered near 1.1730 in Asian trade on Wednesday, steady after three days of gains as markets await Eurozone HICP data. Dollar weakness stemming from bets on a Fed rate cut and risks from the U.S. shutdown kept the pair supported.
• USD/JPY bounced off sub-148.00 after a three-day slide but struggled for follow-through. Hawkish BoJ sentiment and safe-haven demand underpin the yen, while uncertainty lingers after last week’s retreat from the 150.00 level.
  Watchlist: EUR/USD: 1.0700-1.1880, USD/JPY: 140-151

Basic Materials

• WTI crude steadied near $62 in Asian trade on Wednesday after a two-day slide of over 4%. Prices found support as OPEC+ rejected rumors of a sharp production hike, confirming a more minor October increase of 137,000 barrels per day (bpd). Shutdown worries in the U.S., however, cloud the demand outlook.
• Gold hit a fresh record high, extending its most substantial monthly gain since 2011. Safe-haven flows from U.S. shutdown risks, geopolitical tensions, and expectations of further Fed rate cuts continue to fuel the rally, with traders eyeing ADP jobs data and ISM manufacturing for the next catalyst.
  Watchlist: GOLD: 2600-3880, US Oil: 55.60-75.80

Key Economic Events Today:

EST time

08:15 am: USD ADP Non-Farm Employment Change
10:00 am: USD ISM Manufacturing PMI, Prices
12:15 pm: USD FOMC Member Barkin Speaks


Earnings

BMO (Before Market Open):

RPM                 RPM International Inc.
AYI                    Acuity Inc.
CAG                  ConAgra Brands

AMC (After Market Close): USBC



The TEFS Analyst team wishes you a successful day!