A preview of the day ahead in European and global markets.
Investors were already aware that the U.S. labor market needed support, but the latest ADP employment report added fresh concerns. The weak data landed just as the government shutdown cut off the release of official figures.
The ADP report showed payrolls fell by 32,000 in September, compared with economist expectations for a 50,000 increase. August’s 54,000 job gain was also revised to a small decline.
For now, traders are following the “bad news is good news” narrative. The disappointing numbers have strengthened bets on quarter-point rate cuts at both of the Federal Reserve’s remaining meetings this year.
Chip-sector stocks led gains on Wall Street, and that momentum spread across Asia, boosting indexes in Tokyo, Taipei, Hong Kong, and Seoul. European futures are also pointing higher.
Short-term U.S. Treasury yields slipped further in Asian trading, hitting a two-week low. The move kept the dollar pinned near its weakest level in a week against a basket of major currencies.
Gold paused after a strong rally that pushed it close to $3,900 for the first time ever. It was last trading around $3,866.
Analysts warn the duration of the U.S. shutdown will be critical. The Federal Reserve still has several weeks until its next rate decision on October 29, leaving time for economic data releases to resume. But political divisions suggest the standoff could drag on, leaving policymakers with less information to guide decisions.
With the Labor Department closed, there will be no official nonfarm payrolls report on Friday. Weekly jobless claims data, normally due Thursday, will also be delayed. As a result, private Challenger layoffs data will attract more investor attention than usual.
Meanwhile, Federal Reserve communication continues, with Dallas Fed President Lorie Logan scheduled to speak today.
In Europe, several policymakers are set to deliver remarks, including ECB Vice-President Luis de Guindos, ECB board member Patrick Montagner, Irish central bank head Gabriel Makhlouf, and Riksbank Governor Erik Thedéen.
Key market events to watch Thursday:
- Swiss CPI (September)
- Euro-area unemployment rate (August)
- U.S. Challenger layoffs (September)
- U.S. shutdown delays official economic data releases
