With few days left before the September 30th funding deadline, the United States might face another government shutdown, considering President Trump and congressional Democrats remain locked in a standoff over healthcare spending, with Trump cancelling planned meetings with Democratic leaders and ordering federal agencies to prepare mass layoff plans. Disagreements arise after Democrats insist on rolling back Medicaid cuts and extending expiring Obamacare subsidies, which Republicans dismiss as partisan demands. It's a complete role reversal from typical impasse, with Democrats now willing to force a closure over healthcare issues while Republicans push for a "clean" continuing resolution. Federal agencies have not published standard contingency plans, leaving hundreds of thousands of workers uncertain about their employment status as the deadline approaches. With both chambers of Congress having left for recess and no clear path forward, the shutdown appears increasingly inevitable.
EQUITY
The S&P 500 extended losses following Federal Reserve Chair Jerome Powell’s remarks on rising asset valuations and the need to balance inflation and labour market risks. Energy stocks held strong against the current, while materials lagged after Freeport-McMoRan plunged on a force majeure declaration. August new home sales jumped, contrasting recent housing weakness. Xcel Energy topped chart after reaching a settlement for 2021 Colorado fire.
GOLD
Gold prices fell after reaching record high of $3,790 after U.S. dollar rally on Fed Chair Powell's speech. NATO's stern warning to Russia over airspace violations and the potential U.S. government shutdown keep central bank and ETF buying strong, keeping gold underpinned, even as the dollar's strength and divergent Fed views weigh on futures.
OIL
Oil prices shot up to a seven-week high in just two days, with some investors having already started taking profit from the rally triggered by a 607,000-barrel drawdown in U.S. crude inventories. Supply-side disruptions from Ukraine’s drone attacks on Russian energy infrastructure and the temporary halt in Kurdish oil exports had previously supported prices, but the resumption of exports and moderating global demand are now tempering gains.
CURRENCY
The dollar index fell lower after a sharp overnight gain, while the Japanese yen was volatile on mixed signals from the Bank of Japan’s July meeting and political developments ahead of Japan’s leadership election. The Chinese yuan strengthened, with both onshore and offshore rates showing modest gains. Market bets remain data-dependent, with upcoming U.S. GDP, inflation figures, and Fed speeches expected to shape near-term currency trends.
