US Equities Tread With Caution As Government Shutdown Looms

(MENAFN- Mid-East Info) By Daniela Sabin Hathorn, senior market analyst at Capital

• The possibility of a US government shutdown keeps equities on edge
• France CPI data suggests a moderate acceleration in line with expectations

US equity indices are trading with caution on Tuesday as the risk of a government shutdown looms. As of today, Washington still lacks a funding deal and the government's current funding expires at 12:01 a.m. ET on Wed, Oct 1 (06:01 CEST). Agencies have begun shutdown preparations while the Senate considers short stopgaps, but no agreement has been reached yet. These deals often happen in the eleventh hour, so there is still a chance of a breakthrough, which is why markets are playing the waiting game.

If there is a shutdown, the Labor Department would suspend BLS operations, so the September employment data (nonfarm payrolls) scheduled for Friday would not be released until funding is restored; CPI and other major releases would likely slip as well. In a shutdown scenario, traders often lean on private proxies such as the ADP National Employment Report (due Wed, Oct 1) and newer real-time labour indicators. Several agencies have also outlined furloughs that illustrate how broad the data blackout could be. If Congress passes a continuing resolution in time, NFP will be published on schedule; if not, BLS will update the release calendar once operations resume. Volatility could creep up as the day progresses without an agreement, with increased downside bias if the shutdown materialises. The length of the blackout will impact the short direction of equity markets, whilst gold is taking advantage of the uncertainty and risk premium by pushing to new highs.

Elsewhere, France's flash September CPI showed a modest re-acceleration: the national index rose 1.2% year-on-year (from 0.9% in August) and the EU-harmonised measure (HICP) rose 1.1% (from 0.8%). However, weaker monthly readings suggest the rise was driven more by base effects than fresh price pressure. For the wider euro area picture, Germany's state prints point to a small national uptick and, by extension, a euro-area flash edging to about 2.2% y/y. France's softer month-on-month reading tempers that re-acceleration narrative, implying underlying pressures aren't re-intensifying across the bloc even if the headline ticks up. This fits into the ECB narrative of patience as the inflationary picture remains on target.

S&P 500 4-hour chart:

Past performance is not a reliable indicator of future results.

MENAFN30092025005446012082ID1110130309