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Gold hits record price as US Government Shuts Down

The dollar and U.S. stock market were inchoate on Wednesday as the U.S. shutdown its major operations. This delayed the release of important jobs data that could affect the outlook for interest rates. The U.S. payroll data showed that employment in the private sector fell by 32,000, contrary to expectations of a 50,000 increase. This fueled fears that the U.S. labour market may be weakening. In the past, weak employment numbers would have led to increased bets that interest rates could be cut in order to support equity markets. However, with this week's shutdown of the government, it is less clear what will happen. Due to the government shutdown, Friday's publication of the Labor Department's September employment report, which is more comprehensive and closely watched than other reports in this category, will not take place. This would make it difficult for the Federal Reserve to determine whether or not rate cuts are warranted, as they assess U.S. economy health. Matthew Miskin is co-chief investment strategy at Manulife John Hancock Investments, Boston. The Fed is made more difficult by the lack of other data. The agencies have warned that the government shutdown will result in the furloughing of 750,000 federal employees at a cost of $400,000,000 per day. After a volatile session, the S&P 500 ended 0.3% higher. The Nasdaq Composite gained 0.4% and the Dow Jones Industrial Average remained flat. The MSCI All-World Index.MIWD00000PUS gained 0.4% after moderate gains on Wall Street.

Gold prices rose to $3,895 per ounce, a new record for the third consecutive session. The benchmark 10-year Treasury yield in the United States fell by 5 basis points, to 4.1%. The STOXX Europe 600 index rose 1.2%, bucking the trend of the global market. It is now hovering near record highs. The FTSE 100 in Britain and the SMI in Switzerland outperformed. Healthcare stocks soared on expectations that they would avoid excessive U.S. tariffs following President Donald Trump's agreement with Pfizer regarding prescription drug prices.

In the STOXX 600, the healthcare sector is ranked third.

Lars Skovgaard is senior investment strategist for Danske Bank. He said: "There are a lot political risks in the healthcare industry, but once you see these risk diminish, investors will buy."

I think that this could support European shares in the next few days."

SLOW DOWN to Delay Data

Investors may give greater weight to the ADP National Employment Report if Friday's nonfarm payrolls data is not released.

George Lagarias is the chief economist of Forvis Mazars. He said: "The general notion is that these things will have a short term impact and not a longer-term effect, and the markets know this."

The lack of data means we will assume that the current trend will continue. If there's no sign of a strong recovery in the economy, the Fed is likely to continue its current course.

The futures market now indicates a 95% likelihood of a Fed rate reduction in October. This is up from 90% a day ago, and there's a 75% chance that another move will be made in December.

Anthony Saglimbene is the chief market strategist for Ameriprise. He said that, if the shutdown continues, mid-October inflation reports could be affected.

In a note, he stated that "an extended period in which the U.S. Bureau of Labor Statistics does not operate at full capacity could affect data collection for other reports and may impact the data quality." Japan's Nikkei fell 0.9% on Tuesday after a 11% rise in the previous quarter. South Korea's stocks rose by 0.9% to add to their 11.5% gains in the previous quarter. Data showed that exports in September rose at the highest rate in 14 months.

DOLLAR FALLS

The dollar index fell for the fourth consecutive day on foreign exchange markets. It was down last by 0.1% at 97.78.

The euro remained unchanged at $1.1729 while the pound sterling rose 0.2% to $1.3478. The dollar fell 0.6% to 147.12yen after a Bank of Japan report showed that confidence among large Japanese manufacturers had improved in the second quarter. This increased the likelihood of an interest rate increase as early as this month.

After two days of declines, oil prices dropped further as investors weighed up potential OPEC+ plans to increase output next month.

U.S. crude fell about 0.7% to $61.93 per barrel, while Brent dropped 0.8% to $65.5.

(source: Reuters)