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Stocks continue to rise as markets weigh the impact of U.S. government shutdown

Gold traded at near-record highs as investors digested potential ramifications from a U.S. shutdown. Meanwhile, a weak U.S. private labour market report strengthened bets that the Federal Reserve will cut rates.

The prolonged shutdown of the U.S. federal government could delay or disrupt the release of important official data, such as those on inflation and employment. This would cloud the picture of the health of the largest economy in the world and the direction of interest rates.

A Friday release of the monthly payrolls report is unlikely. This brings into focus an ADP employment report from overnight that showed unexpected job losses in September. The traders are pricing in two quarter point Fed rate cuts before the end of this year.

Kevin Thozet of Carmignac Asset Management, who is a member of the investment committee, said, "I hope that they can sort this quickly." He was referring to the shutdown in the federal government. Inflation data were also due before the next Fed meeting.

He said, "It is like a man walking a dog with blindness."

SHUTDOWN ANGST HURTS DOLLAR AND BOOSTS GOLD

He added that while U.S. stock prices have done well, the dollar has weakened due to uncertainty over the credibility of U.S. financial institutions in general.

The MSCI global stock index was up around 0.25% Thursday after European stocks reached another record high of about 0.6%.

Wall Street futures also rose between 0.2 to 0.4%.

The tech shares in Asia rose earlier, contributing to the rise in regional stock indexes. This was partly due to news that South Korean chip giants Hynix and Samsung had signed partnerships with OpenAI for data centres.

Fed easing bets, along with some shutdown anxiety, pushed gold overnight to a new all-time record of $3,895.09, and also supported U.S. Treasuries by sending yields dramatically lower.

On Thursday, the yield on two-year Treasury bonds fell to its lowest level in two weeks at 3.531%. It was last seen at 3.5408%.

The last time gold changed hands was around $3,869.

Michael Brown, Senior Research Strategist at Pepperstone, said: "As it is usually the case, new highs will likely beget more fresh highs. The momentum remains firmly with bulls and the fundamental argument for further upsides in PMs (precious Metals) is also a strong one."

The U.S. Dollar Index, which measures the currency's performance against six major counterparts, remained near the overnight low of 97.459, which was a one-week low. The index last stood at 97.578, down 0.1% on Wednesday's closing price.

In remarks made at an industry conference, Bank of Japan Deputy governor Shinichi Uchida expressed confidence that the conditions were in place for another rate hike.

The euro increased slightly to $1.1752 while the sterling rose to $1.35.

The oil price rose as a result of the prospect of tougher sanctions against Russian crude. This was an attempt to end a losing streak that lasted three days and brought it down to 16-week-lows.

Brent crude futures rose 0.2%, to $65.48 per barrel. U.S. West Texas Intermediate crude also gained 0.2%, to $61.90 per barrel.

(source: Reuters)