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Asian markets dipped and US futures fell on Wednesday amid growing fears of a government shutdown in Washington, overshadowing optimism over potential interest rate cuts by the Federal Reserve. Gold hovered just below record highs as investors sought safe havens.
The political deadlock comes as Democrats and Republicans remain divided on a funding bill to keep the government open beyond Tuesday, the end of the fiscal year. A temporary funding measure passed by the House failed to gain enough Democratic support in the Senate, leaving a shutdown increasingly likely.
Democrats are demanding the restoration of hundreds of billions of dollars in healthcare spending for low-income families, which the Trump administration is aiming to cut.
“We’ll probably have a shutdown,” President Donald Trump told reporters ahead of the vote. He also warned that the stoppage could be used to cut progressive programs and lay off public sector workers, adding that those affected would likely be “Democrats.”
If a shutdown occurs, it would halt non-essential government operations, delay paychecks for federal workers, and potentially disrupt social benefits.
Markets are especially concerned that a shutdown could postpone key economic data, including Friday’s non-farm payrolls report, which is a critical input for Fed policy decisions.
“Without (the report), the Fed would be forced to navigate October’s decision by starlight rather than compass,” said Stephen Innes of SPI Asset Management, noting the increased uncertainty could drive market volatility.
Futures for all three major US indexes were in the red, following the Dow’s recent record close. Asian markets were mixed — Tokyo, Sydney, and Manila declined, while Seoul, Singapore, and Taipei saw modest gains. Hong Kong and Shanghai were closed for a holiday.
Gold remained strong, trading just below its all-time high of $3,871.72, supported by a weaker dollar and expectations of lower interest rates.
In corporate news, shares in Australian mining giant BHP dropped over 1% after reports that China’s state-backed iron ore buyer had asked steelmakers to pause purchases from the company, citing a pricing dispute. Australian Prime Minister Anthony Albanese described the move as “disappointing.”
Key figures around 0215 GMT:
Tokyo – Nikkei 225: down 1.0% at 44,480.02
Euro/dollar: down at $1.1736 from $1.1739
Pound/dollar: down at $1.3439 from $1.3448
Dollar/yen: up at 148.00 yen from 147.86 yen
West Texas Intermediate: up 0.2% at $62.50 per barrel
Brent crude: up 0.2% at $66.18 per barrel
New York – Dow: up 0.2% at 46,397.89 (close)
London – FTSE 100: up 0.5% at 9,350.43 (close)
