Closing Recap

U.S. stocks finished broadly higher, with the S&P 500 and Nasdaq notching new record highs as a surprisingly weak private payrolls report fueled aggressive Fed rate cut bets, allowing investors to shrug off the start of a government shutdown; gold surged to another record high, while oil and the dollar fell. In the currency markets, the U.S. dollar tumbled as the weak ADP report solidified dovish Fed expectations, with the EUR/USD rallying towards 1.1800, the GBP/USD firming on hawkish BoE commentary, and the Japanese Yen surging on its safe-haven status. 

U.S. equity futures initially saw weakness overnight as the shutdown became official, and this cautious tone carried over to the European open, with major indices like the DAX and FTSE starting slightly in the red. However, the bullish sentiment from Wall Street’s recovery yesterday is providing a floor, with European markets now showing a strong start to October trading.

Key Takeaways 

• Stocks Rally on “Bad News is Good News”: Equities surged (S&P +0.96%), with the S&P 500 and Nasdaq hitting new records, as a weak ADP jobs report (-32K) bolstered expectations for more aggressive Fed easing. 
• Government Shutdown Ignored: Markets completely shrugged off the start of a partial U.S. government shutdown, with historical data suggesting minimal long-term market impact. 
• Gold Surges to New All-Time High: Gold prices continued their torrid rally, with December futures soaring to a new record of $3,897.50 per ounce, driven by shutdown fears, dovish Fed expectations, and a weaker dollar. 
• Tech & Defensives Lead: Healthcare was a standout performer (+3%), while Technology and defensive sectors like Utilities also showed strength. 
• Dollar on track for 5th consecutive losing day: The U.S. dollar weakened as the dismal ADP report fueled Fed rate cut bets, with the Euro and Pound gaining ground, while the Japanese Yen was the strongest major currency on safe-haven flows. 
• Yen Emerges as Top Performer: The Japanese Yen is the strongest major currency this week, rallying on safe-haven demand from the U.S. shutdown and renewed expectations for a Bank of Japan rate hike as soon as this month.
• Bitcoin Surges to 7-Week High:Bitcoin prices rallied sharply, breaking above $118,000, as “Uptober” optimism and the prospect of a government shutdown-induced liquidity boost fueled buying. 
• Oil & Yields Fall: Crude oil prices declined on concerns about a potential large OPEC+ output hike, while Treasury yields fell as investors priced in a more dovish Fed. 

Market Overview

U.S. equity markets opened higher and rallied throughout the session, with the S&P 500 and Nasdaq Composite pushing to new all-time highs as investors embraced a “bad news is good news” narrative and completely shrugged off the start of a partial U.S. government shutdown. The primary catalyst for the rally was a surprisingly weak ADP private payroll report, which showed employment fell by 32,000 in September, a far cry from the expected gain of 50,000. This dismal data point, following a series of other soft labor market indicators, has all but cemented the market’s conviction in multiple Federal Reserve interest rate cuts, starting with a 100% chance of a 25-basis-point cut now priced in for the October meeting. 

Index	Last	Change	% Change
S&P 500	6711	22.73	0.0034
Nasdaq	22755	95.15	0.0042
Dow Jones	46441	43.15	0.0009
Russell 2000	2442	5.87	0.0024

The market’s nonchalant reaction to the government shutdown, which began at midnight, was also notable. Historical data showing that stocks have often rallied during and after shutdowns, combined with the Fed’s likely dovish turn in response to any data delays, seemed to give investors the confidence to keep buying. Market breadth was strong, and leadership came from the Healthcare sector, which rallied 3%, as well as Technology and defensive Utilities. 

This risk-on mood was not confined to equities. Gold surged to another fresh all-time high, and cryptocurrencies like Bitcoin also saw a strong bid. The main casualties were the U.S. dollar and crude oil. The dollar weakened broadly as rate cut expectations intensified, while oil prices fell on reports that OPEC+ is considering a larger-than-expected production hike.

Economic Calendar

The U.S. economic calendar today was dominated by the weak ADP jobs report, which overshadowed a slightly better-than-expected ISM manufacturing print. The government shutdown means tomorrow’s jobless claims and Friday’s NFP report will be delayed. 

Yesterday’s Major U.S. Releases: 

• U.S. ADP Employment Change (Sep): Showed a surprising net loss of -32K jobs, a massive miss of the +50K consensus and a clear sign of a weakening labor market. 
• U.S. ISM Manufacturing PMI (Sep): Came in slightly better than expected at 49.1 (vs. 49.0 exp), but still indicates a contraction in the manufacturing sector. Notably, the new orders component fell while prices paid eased.

With the U.S. government shutdown in effect, all data releases from agencies like the Bureau of Labor Statistics are cancelled until further notice. 

• CANCELLED – US Weekly Jobless Claims. 
• 11:30 GMT – US Challenger Job Cuts (Sep). (Low-tier, but may garner more attention).
• Flash inflation data from France, Germany, Italy. 
• Eurozone Unemployment.

Commodities, Treasuries and Currencies 

Gold prices surged to a new record high, with the December futures contract gaining $24.30 (+0.63%) to settle at $3,897.50 per ounce. The rally was fueled by strong safe-haven demand ahead of the U.S. government shutdown and a weaker U.S. dollar. Crude oil prices slumped on Monday, with WTI falling $0.59 (-0.95%) to settle at $61.78/bbl. The drop was attributed to plans for another OPEC+ output increase and the resumption of Iraqi Kurdish oil exports, which raised global supply outlook concerns. 

Asset	Change	Unit	Last
WTI Crude	-0.59	USD/bbl	61.78
Gold	24.3	USD/oz	3897.5
EUR/USD	-0.0001	USD	1.1732
USD/JPY	-0.76	JPY	147.15
US 10-Yr Yield	-4.2 bps	%	0.04107

In the currency markets, the U.S. Dollar Index (DXY) was subdued, trading around 97.90, as traders stayed cautious due to the looming government shutdown:

• USD/JPY: The Japanese Yen is the standout performer, with USD/JPY falling to the low 147.00s. The Yen is benefiting from a perfect storm of safe-haven flows from the U.S. shutdown and rising expectations of a Bank of Japan rate hike this month, fueled by a solid Tankan survey and recent hawkish dissents. A technical break below the 146.30 level could trigger a significant medium-term bearish move. 
• EUR/USD: The pair remains in a tight consolidative range after failing to break above the 1.1800 barrier. Price action is currently boxed in between its 100-hour moving average (~1.1724) and 200-hour moving average (~1.1741). Large options expiries today layered from 1.1700 to 1.1790 are likely to further contain the range ahead of any new catalyst. 
• GBP/USD: The pair is on a five-day winning streak, holding near 1.3500. Sterling is drawing support from recent cautious remarks by BoE officials who have highlighted “higher-for-longer” inflation risks, tempering expectations for imminent rate cuts. The nearby 100-day moving average at 1.3494 remains a key hurdle.

U.S. Treasury yields declined, with the 10-year yield falling over 4 basis points to 4.107%, as investors sought safety ahead of the shutdown deadline and priced in dovish Fed expectations. Bitcoin rebounded, rising above $114,000, driven by seasonal “Uptober” optimism and signs of renewed buying by large holders.

Looking Ahead 

The market will be navigating an information vacuum in the coming days due to the government shutdown, which will delay key data releases like jobless claims and the Nonfarm Payrolls report. This will place even greater emphasis on private-sector data, like tomorrow’s ISM Services PMI, and commentary from the many scheduled Fed speakers. The duration of the shutdown will be a key focus, as a prolonged impasse could begin to have a more tangible economic impact. Earnings season will also start to ramp up, providing company-level insights.

What to Watch:

• Yen’s Continued Strength: The Yen is the clear leader in FX. The combination of BoJ hawkishness and U.S. uncertainty is a powerful driver. Watch for any further momentum that could test the critical 146.30 support level in USD/JPY. 
• Bitcoin’s “Uptober” Momentum: Bitcoin is shrugging off the macro uncertainty and is in a clear uptrend. The move above $117,000 has shifted the technical picture, with bulls now targeting the August highs. 
• The Path of Least Resistance: For equities, the trend remains unequivocally up. Traders will be watching to see if the S&P 500 can hold above the 6,700 level and build on its five-month winning streak, despite the lack of official economic data.