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Wall Street futures drop as the clock ticks towards a US government shutdown

Wall Street futures fell on Wednesday, as the clock counted down towards a U.S. shutdown which would delay the release crucial jobs data. It could also muddy up the outlook for interest rates.

The shutdown will begin at 0400 GMT, after the Senate rejected an interim spending measure which would have kept government activities afloat for another few weeks. The Senate's 55-to-40 vote ensured that government agencies would have to cease all activities except "essential", disrupting everything from airline travel to the monthly employment report.

S&P 500 and Nasdaq Futures both fell by 0.4%. Gold prices rose 0.2%, to $3,865 per ounce. This is back at the record high set on Tuesday of $3,871.45 an ounce.

Investors may give greater weight to the ADP National Employment Report, due later today. Forecasts predict a modest increase of 50,000 jobs in the private sector.

"Typically, a shut down is not important for the markets. The 2018-2019 shutdown lasted over a full month and actually led to a rise in Wall Street, according to Kyle Rodda.

Rodda said that the markets face two issues. The first is the delayed release of non-farm payroll data. He said that the other issue is "U.S. president Trump has also threatened permanently to lay-off employees, which could turn this shutdown into a small labour market shock."

The Federal Reserve is now expected to cut rates in October by 96%, up from 90% a day ago, and there's a 74% chance that they will do so again in December.

The Nikkei 225 index of Japan fell 1% on Wednesday after a 11% increase in the previous quarter. South Korean shares increased by 0.7% to add to their 11.5% gains in the previous quarter. This was after data revealed that exports in September rose at the highest pace in 14-months.

Taiwan's stocks gained 1.3%. The island's chief tariff negotiator stated on Wednesday that Taiwan would not accept a deal to have half of all semiconductor production take place in Washington.

Chinese markets are closed, including Hong Kong.

Overnight Wall Street closed the quarter in a positive way, with a higher closing price. The data showed that U.S. employment declined in August, while job openings were marginally higher. Consumer confidence also fell more than expected.

The dollar index on the foreign exchange market held steady at 97.84 after three consecutive days of losses. It climbed 0.1% to reach 148.1 yen. This was a small reaction to the Bank of Japan's survey which showed that Japanese companies expect prices to increase by an average of 2.4% per year in the future, well above its 2% target.

The Reserve Bank of India will likely keep its rate at 5.5% later in the day as it assesses the economic impact of previous rate cuts amid trade uncertainty.

Asia's Treasury yields were stable. The benchmark 10-year Treasury yield in the U.S. was unchanged at 4,1561% after rising 1 basis point overnight.

After two days of declines, oil prices stabilized on Wednesday as investors weighed the possibility of OPEC+ increasing output next month with the shrinking U.S. inventories.

U.S. crude climbed 0.1% to $62.46 per barrel while Brent rose 0.2% to $66.16.

(source: Reuters)