1/10/2025 Evening Reports
U.S. futures fall as government shutdown clouds economy; ADP payrolls contract ahead of ISM PMI; Eurozone inflation steady, but Germany's jobless rate rises
- Global market sentiment is cautious as the U.S. government shutdown takes effect, clouding the economic outlook and pushing Nasdaq futures down by around 0.5%. The primary immediate impact of the shutdown is the delay to the release of key government data, which complicates the Federal Reserve’s assessment of the economy. This policy uncertainty is driving strong demand for safe havens, with gold hitting a new record high of almost $3,900/oz. Adding to the cautious tone, the ADP private payrolls report showed a contraction of 32,000 jobs in September, reinforcing concerns about a labour market slowdown. Investors are now looking to the ISM Manufacturing PMI, a privately-run survey that will provide an unscheduled snapshot of industrial health.
- In the Eurozone, inflation remains a key focus. Flash HICP inflation held steady at 2.2% year-on-year (core 2.3%), supporting the view that the ECB will likely maintain its current policy stance. However, underlying economic conditions in Germany appear weak, with rising unemployment and falling retail sales in August highlighting weak domestic demand. In terms of sectors, European healthcare stocks rallied following news of a U.S. drug-pricing deal.
- Meanwhile, the Bank of Japan’s Tankan survey in Japan showed an improvement in sentiment among large manufacturers, but this was overshadowed by expectations of a rate hike. The Nikkei index fell by almost 1% due to profit-taking at the start of the new fiscal period and a firmer yen (at around ¥146.7 per USD), reflecting the market’s anticipation of imminent BOJ policy tightening. Regional liquidity is also muted as markets in China and Hong Kong are closed for a public holiday.
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