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New highs for stocks, gold and bitcoin amid US shutdown

The ongoing US government shutdown continues to cloud the outlook for markets this week, as uncertainty over scheduled economic data releases puts renewed focus on guidance from central bank officials. Equities continued to break into new territory, with the Dow Jones Industrial Average closing above 47,000 points for the first time on Friday and European stocks gaining on AI optimism. Japanese equities surged on Monday, with the Nikkei 225 jumping to a record high after the ruling conservative Liberal Democratic Party selected a new leader. Gold soared to a historic level above USD 3930 per ounce, while bitcoin set a fresh all-time high above USD 125,000 in weekend trading.

  • Date
  • Auteur Shane Strowmatt, Senior Investment Writer
  • Temps de lecture 5 minutes

Stock chart
© Shutterstock

This week, the ongoing US government shutdown casts uncertainty over scheduled data releases, with market participants likely to pay particular attention to guidance from Federal Reserve officials in search of clues on monetary policy. Investors will look for direction from Fed Chair Powell’s speech (Thursday) and a flurry of remarks by Federal Open Market Committee (FOMC) officials during the week, as well as the FOMC meeting minutes (Wednesday). In Europe, European Central Bank (ECB) President Lagarde addresses markets on Monday and several Bank of England officials, including Governor Bailey (Monday), are also scheduled to speak. German factory orders (Tuesday) and industrial production (Wednesday) as well as ECB minutes (Thursday) will offer insight into the health of European economies. Holidays in Asia will further complicate the flow of data to market participants this week with market closures in China and South Korea at the start of the week.

US equities continue record run

US equities continued their upward momentum on Friday, with the Dow Jones Industrial closing above 47,000 points for the first time, gaining 0.5%. The broader S&P 500 finished little changed, while the Nasdaq 100 eased by 0.4% after reaching a new peak earlier in the day. Optimism was fuelled by new artificial intelligence partnerships announced by Hitachi with OpenAI and Fujitsu with Nvidia, supporting positive sentiment across technology shares. Despite a slight pullback in some stocks such as Nvidia, which is still up around 40% so far this year, overall market sentiment remains boosted by expectations of further interest rate cuts by the Fed and robust forecasts for the artificial intelligence sector. Macroeconomic data was little help in defining market sentiment as the government's shutdown prevented the release of September’s monthly employment report on Friday.

Japan stocks hit new record highs

Japanese equities climbed sharply on Monday, with the Nikkei 225 gaining 4.8% to reach an all-time high after the conservative Liberal Democratic Party elected Sanae Takaichi as its new leader over the weekend, likely making her Japan's first female prime minister. Investor optimism was driven by expectations that Takaichi will pursue accommodative monetary policies and promote economic expansion in partnership with the private sector. The yen weakened past the 150 mark against the US dollar for the first time since August, raising concerns about its impact on the domestic economy. Market activity elsewhere in Asia was muted, as Chinese and South Korean equity markets remained closed for holidays. Hong Kong’s Hang Seng Index dropped 0.8%, and Australia’s S&P/ASX 200 was slightly lower, down 0.1%, on Monday.

Gold, bitcoin hit record highs

Gold prices surged to a new record in early Asian trading on Monday, trading around USD 3930 per ounce and supported by a sharp slide in the Japanese yen and rising expectations for further US interest rate cuts in October. Uncertainty persisted around the US government shutdown and political developments in Japan drove volatility in currency markets. Meanwhile, bitcoin surged past USD 125,000 in Asian trading over the weekend, reaffirming its position as the leading cryptocurrency by market value. By Monday morning, it was trading near USD 123,500. The latest rally was driven by increased institutional participation and renewed optimism following signals from the US administration indicating a friendlier regulatory framework. Bitcoin has gained almost 10% over the past week, rebounding from September’s decline and boosted further by positive sentiment around October’s typical strength for digital assets.

European equities advance on AI optimism

Major European stock markets posted further gains on Friday, supported by continued enthusiasm for artificial intelligence following new partnerships involving OpenAI, Nvidia, and Japanese technology firms. The EuroStoxx 50 edged up 0.1% to 5651.71 points and the Swiss SMI rose 0.6% to 12,507.17 points. Optimism in technology shares was reinforced by analyst upgrades and the expectation that substantial investments in AI infrastructure will yield profits, while selected pharmaceutical and banking stocks also advanced on sector-specific news.

Corporate and economic calendar

Corporate news in focus: There is no major corporate news scheduled today.

Economic data in focus: Swiss unemployment rate (09:00), euro-area Sentix investor confidence (10:30), euro-area retail sales (11:00) and ECB President Christine Lagarde speaks (19:00).

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Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.