Global Markets Risk-Off as US Shutdown Looms, Safe-Haven Gold Surges Above $3,800

GLOBAL MOOD: Risk-off
Drivers:  US Government Shutdown, Fed Rate Cut Expectations

Global markets stayed risk-off as US government shutdown fears rattled confidence, delaying key data releases and fueling safe-haven flows. Expectations of Fed cuts and labour market weakness tempered sentiment, with gold hitting record highs above $3,800

TODAY’S WATCHLIST
 - RBI MPC Meeting Day-2
 - RBA Policy Press Conference

THE BIG STORY
US President Donald Trump and Democratic leaders made little progress during a White House meeting on Monday aimed at averting a looming government shutdown, with both sides blaming the other for potential failure to extend funding beyond Tuesday midnight. Vice President JD Vance warned, “I think we're headed to a shutdown,” as key agencies including the Labour and Commerce departments signalled that economic data releases such as September employment figures, construction spending, and possibly August trade data would be halted if funding lapses. The Bureau of Labor Statistics, which publishes crucial data used by the Federal Reserve, businesses, and households, would cease most activities, though the August Metropolitan Area Employment and Unemployment report would still be released. 

Investors responded swiftly to the heightened uncertainty, pushing gold prices above $3,800 an ounce for the first time ever. The surge reflects a flight to safe-haven assets amid expectations of further US rate cuts, the threat of a government shutdown, highlighting persistent risks to both financial markets and the broader economy.

Data Spotlight
US Pending home sales, based on signed contracts, rose 4.0% last month, well above economists’ expectations of 0.2%, with increases seen in the South, Midwest, and West, while the Northeast saw a decline. Year-on-year, pending sales advanced 3.8%.

Meanwhile, the Dallas Fed’s general business activity index for Texas manufacturing slipped to -8.7 in September, marking a second consecutive monthly contraction and the steepest since June. Production, shipments, and new orders all showed declines, while capacity utilisation and labour metrics suggested slightly lower employment and longer work hours, pointing to softening manufacturing demand.

Takeaway: US housing demand remains resilient due to lower borrowing costs, but a weakening labour market and softening manufacturing activity signal potential headwinds for broader economic growth.

WHAT HAPPENED OVERNIGHT

• US Stocks rises on tech gains, Nasdaq leads amid AI optimism
  • Nasdaq led gains as investors bought technology-heavyweights despite potential US government shutdown concerns.
  • S&P 500 was boosted by AI-related stocks, with Nvidia up 2% and Microsoft adding 0.6%.
  • Lam Research rose 2% after Deutsche Bank upgraded its rating to “buy.”
  • Investors remain focused on Fed policy and ongoing fiscal negotiations between Republicans and Democrats.

• US Treasury yields dips amid government shutdown fears 
  • Yield on the 10-year US treasury note slipped to around 4.16% on Monday.
  • Concerns over a potential US government shutdown weighed on investor sentiment.
  • Traders awaited key US economic data including nonfarm payrolls, job openings, private payrolls, and ISM manufacturing PMI.
  • Strong US data last week tempered expectations for deeper Federal Reserve rate cuts, with only 40 basis points of easing priced in by year-end.

• US Dollar index slides ahead of key US jobs data, government funding deadline
  • The dollar weakened against major peers including the euro and yen, extending losses for a second session.
  • Concerns over a potential US government shutdown weighed on market sentiment.
  • Investors await September’s nonfarm payrolls report, job openings, private payrolls, and ISM manufacturing PMI for guidance on Fed policy.

• Crude oil prices fall 3% as OPEC+ output hike and Iraqi exports boost supply
  • Brent crude oil prices declined sharply after OPEC+ signalled further output increases for November.
  • Resumption of oil exports from Iraq’s Kurdistan region via Turkey added to supply concerns.
  • Brent crude fell 3.1% to $67.97 a barrel, while US WTI crude dropped 3.45% to $63.45 a barrel.

 

 

Day’s Ledger

• Economic Data
• Japan August Retail Sales Data
• US Consumer Confidence Data
• India Government finances for April-August
•  
• Corporate Actions
• AGI Greenpac to consider fund raising
• Alstone Textiles to consider fund
• Cyber Media to consider amalgamation
•  
• Policy Events
• RBI MPC Meeting Day-2
  RBA Policy Press Conference
• Fed Bostic Speech
• Fed Jefferson Speech 
• ECB Machado Speech
• ECB Cipollone Speech
• BoE Lombardell Speech
  
  
  
  

Tickers to Watch

• IRFC inks loan agreements worth ₹165 billion with Haryana and Maharashtra
  360 ONE subsidiaries sign agreements with Credit Suisse Securities and UBS AG
  M&M signs pact with Turkey’s Tera Yatirim to divest stake in Sampo Rosenlew
  BHARAT ELECTRONICS secures ₹10.92 billion in fresh orders since Sept 16
  TATA MOTORS says JLR to restart partial manufacturing operations in coming days
  VODAFONE IDEA approaches SC seeking waiver of penalty, interest on AGR dues
  SEBI bars MAN INDUSTRIES and senior executives for 2 years over fund diversion
  
  

Must Read

• Destocking prior to GST 2.0 may impact FMCG sales
• US President Donald Trump announces 100% levies on foreign-made films
• Europe, Asia roll out the welcome mat for Indian talent amid US curbs
• SEBI's Valid UPI rollout faces hurdles as advisors struggle with handles
• IIP growth slows to 4% in August as manufacturing output weakens
• Moody’s Affirms India at Baa3, Flags Fiscal Constraints and Tariff Uncertainty
• Kharif Crop Prospects Satisfactory Overall, Risks from Excess Rainfall Remain
  Mastering the Regional Disparities Key to Bihar Elections
• Eurozone Inflation Outlook Is ‘Reasonably Benign,’ ECB’s Lane Says
• Japan’s Ruling Party Gears Up to Select Next Prime Minister
• ECB’s Lane Says Inflation Outlook Is ‘Reasonably Benign’

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See you tomorrow with another edition of The Morning Edge.

Have a great trading day.

Markets don’t just crash. They crack when dignity runs out of credit.

Kashmir bled ₹1.35 billion every single day when curbs froze activity. Manipur’s ethnic clashes pushed retail inflation to 11.6%. Ladakh’s unrest shows how quickly stalled aspirations spill into volatility.

Kirti Tarang Pande writes, these aren’t “social issues.” They’re predictable financial shocks that balance sheets fail to price in. It’s time India built tools to forecast unrest the way we forecast commodity swings.