Market Report.
📉 Wall Street continues to move towards new highs despite government shutdown in the U.S. Reflection: Is anarchy good for the market?
🚫 The US Non-Farm Payrolls (NFP) release scheduled for October 3, 2025, has been suspended due to the ongoing government shutdown. The Bureau of Labor Statistics (BLS), which publishes these key reports, has paused all data collection and dissemination activities until funding is restored.
💬 Treasury Secretary Scott Bessent stated in an interview with CNBC that the ongoing government shutdown could negatively impact economic growth. However, investors appear to be dismissing these concerns, indicating a level of confidence in the market despite potential economic challenges.
📉 Year-to-date hiring has decreased by 58% compared to the same period last year, reaching its lowest level since 2009, according to data from the outplacement firm Challenger, Gray & Christmas.
🌍 However, the recent surge in global stocks seems to be driven by the ongoing enthusiasm for AI technologies and increasing bets that the Federal Reserve will cut interest rates again this year.
📊 Federal Reserve Bank of Chicago President Austan Goolsbee said new data produced by his staff suggests the labor market remains stable, indicating “some steadiness in the labor market” and the underlying economy still growing “pretty solidly”. He reiterated that interest rates can come down “a fair amount” if officials get reassurance that inflation is on a path back to the Fed’s 2% target. Goolsbee also said Fed officials can turn to alternative data sources in the absence of official government statistics during the government shutdown, pointing to a Chicago Fed analysis that suggested the unemployment rate was likely unchanged in September.
⚖️ President Trump is weighing slashing “thousands” of federal jobs ahead of a meeting with his budget director, Russell Vought, as the White House looks to ratchet up pressure on Democrats to end the ongoing government shutdown. The threat of permanent cuts to the federal bureaucracy is being used by Republicans to encourage Democrats to vote to reopen the government.
💰 Budget Director Vought has already begun withholding spending for New York City transit projects and clean energy programs in states that voted for Democrat Kamala Harris in 2024. White House Press Secretary Karoline Leavitt stated that the job cuts will “likely be in the thousands” and that the administration will look at agencies that “don’t align with the administration’s values” or are seen as a “waste of the taxpayer dollar.”
🏥 Meanwhile, the government shutdown has led to more than 32,000 workers being furloughed at the Department of Health and Human Services. At the Centers for Disease Control and Prevention (CDC): The emergency operations office remains open. At the Food and Drug Administration (FDA): Routine inspections of food manufacturing facilities have been suspended, raising concerns about a backlog. Approval of new drugs, medical devices, and other products has been halted.
🧵 The Trump administration’s 50% tariff on Indian textile imports, implemented in late August, has been a major blow to India’s $174 billion textile industry, which supports over 45 million jobs. Many small and medium-sized textile factories that sell exclusively to the U.S. market have already shut down, while others are trying to find new customers in markets like the UK. The tariffs could slash India’s U.S.-bound textile exports by almost 52% over the medium term and shave 0.9% off India’s GDP, according to Bloomberg Economics analysis.
🏭 Textile manufacturers had taken out significant bank loans to expand capacity after the COVID-19 pandemic, when customers asked them to diversify away from China. The sudden tariff shock has left them struggling to pay interest on these loans.
🇪🇺 Europe must act fast to strengthen the global role of the euro, as the window of opportunity may soon close, according to Francois Villeroy de Galhau, the French central bank chief. Erratic U.S. economic policy has shaken investors’ confidence in the dollar this year, but Europe has so far struggled to capitalize on this opportunity due to indecision, discord, and bureaucracy.
💱 Villeroy suggested that Europe could leverage negotiations with trade partners hit hard by U.S. protectionist measures, such as India, Switzerland, and Indonesia, to invoice more of its foreign trade in euros. The ECB could expand the availability of euro liquidity lines to non-euro zone central banks and potentially issue a digital currency to further bolster the use of the euro.
🔄 Expanding the ECB’s Target wholesale payment system to accept currencies from countries like India, Switzerland, the UK, Canada, or Brazil could also help strengthen the euro’s global role. Another critical issue holding back the euro is the relative scarcity of a liquid safe asset, which Europe could tackle by merging existing supranational debt and transforming sovereign debt into genuine European sovereign debt instruments. In other words, a product that competes with the US bond.
📉 The pound steadied on Thursday, struggling to rise against a weakening dollar, as traders start to assess the impact the UK’s November budget will have on the economy and sterling. UK finance minister Rachel Reeves’ annual budget is due in eight weeks, and she will try to stay on course for her fiscal targets, although higher taxes would weigh on the already fragile economy.
💸 Reeves is expected to raise taxes again, having ordered employers to pay around 25 billion pounds more in social security contributions in her first budget last year. Higher borrowing costs are narrowing fiscal headroom, raising the risk of tax hikes or spending cuts, which could dampen appetite for the pound.
📉 A Bank of England survey showed British businesses have the weakest hiring intentions since 2020 and expect the fastest consumer price inflation since early 2024. Investors fear that with this outlook, the Bank of England will be much more cautious before further cuts in interest rates.
🏦 In Japan, Ueda reiterated the BOJ’s resolve to continue raising interest rates if the economy and prices move in line with its forecasts, but said there are various uncertainties surrounding Japan’s outlook. He noted that if uncertainty regarding overseas economies and trade policies remains high, firms may focus more on cost-cutting and weaken efforts to raise wages, which could affect inflation. Is he trying to say that in such a case, BoJ won’t continue the interest rate rise? This may reduce the likelihood of an interest rate hike by the BOJ in October, with a December hike now seen as more likely.
🌍 Possible new horizons for world trade exports: Major container shipping companies like MSC, Maersk, CMA CGM, and Hapag-Lloyd have reiterated their commitment to avoiding the Arctic passage, citing environmental concerns and lack of commercial viability. The Northern Sea Route, which runs along Russia’s Arctic coast, can halve the Asia-to-Europe shipping time compared to the southern route, but it remains underdeveloped and risky for commercial shipping.
🚢 One container ship, the Istanbul Bridge, has recently used the Northern Sea Route to transport cargo between Russia and China, inaugurating a new “Arctic Express” service. The Istanbul Bridge is a reinforced ship capable of handling thin ice, but would still require icebreaker assistance for thicker ice, making the route commercially unviable at scale.
🛳️ While China is experimenting with using the Northern Sea Route, experts say it is not ready to become a new Suez Canal equivalent for container traffic or oil/gas tankers.
🌍 Geopolitics:
🔍 The individuals responsible for the Russian drones are caught, but the issue is that they are not Russian: Three German nationals were detained in Norway after flying a drone within a prohibited five-kilometer zone around the Røssvoll airport. A Chinese citizen fined and expelled for similar actions at Svolvær airport, with Norwegian police investigating further drone sightings near airports and other important facilities.
💥 A massive explosion at Chevron’s El Segundo oil refinery near Los Angeles has caused widespread panic as people fled for cover. The blast has sent shockwaves through the area, leading to concerns about safety and potential environmental impacts.
📰 According to the Wall Street Journal, the United States will supply Ukraine with intelligence to facilitate missile strikes deep within Russia.
🗣️ Vladimir Putin responded to Donald Trump’s recent comments by stating, “We are fighting the entire NATO bloc, we feel confident and are advancing steadily. If this is a ‘paper tiger,’ then what is NATO?”
🌍 In relation to the middle east conflict, Putin says ‘Gaza has been turned into the largest children’s CEMETERY in the world’ avoiding naming those responsible for it.
📊 Market View.
📈 Wall Street continues to advance despite the government shutdown and the suspension of employment data for today in the United States. Mini S&P 500 futures are pushing to new highs, currently trading stronger than ever at 6,784 points and rising, while Nasdaq 100 futures are also advancing, reaching 25,190 points.
💵 The dollar is strengthening again, with the dollar index surpassing 98 points during yesterday’s session, before retracing to the current 97.90. This has caused further retracements in EUR/USD, which has struggled to notably surpass 1.1750 and has fallen to the current 1.1718.
📊 In Europe, the recovery of DAX 40 futures has been spectacular over the last two days, returning to levels close to historical highs, currently trading at 24,625 points. Eurostoxx 50 futures have also strengthened, reaching new highs at 5,680 points.
📉 Crude oil is experiencing a significant drop, breaking below the range in which it had been trading since August. Brent crude fell to $64, rebounding upward to the current $64.75.
💰 Gold remains close to the highs reached on Wednesday, currently trading at $3,880.
💸 Bitcoin is joining the rise in the markets, managing to break through $120,000, but is currently retracing to $119,950
