Asian Stocks, US Futures Fall as Government Shutdown Begins – Asia Market Wrap

Asian shares fell along with equity-index futures as the deadline to avert a US government shutdown lapsed, disrupting one of the country’s largest employers and threatening to delay key economic data releases.

Contracts for the S&P 500 and Nasdaq 100 indexes fell 0.4% after a stopgap funding bill to avoid the shutdown failed. A gauge of the dollar declined for a fourth day while gold touched a record high above $3,875 an ounce. Asian shares slipped 0.2% with China and Hong Kong closed for a holiday. Treasuries were mostly flat with the yield on the 10-year at 4.15%.

The US government began shutting down as Congressional Democrats and President Donald Trump clashed over health-care spending. The president raised the stakes in the fight, saying his administration may permanently fire “a lot” of federal workers in the event of a shutdown.

Investor focus is squarely on the shutdown, which clouds the outlook for the world’s largest economy and threatens to delay key economic reports used to gauge the Federal Reserve’s path for interest-rate cuts. The added uncertainty comes as the S&P 500, rebounding from April lows, notched its strongest September in more than 15 years, fueled by optimism over artificial intelligence and lower rates.

A gauge of the dollar hovered near a one-week low as investors braced for the potential fallout from a US government shutdown.

The Congressional Budget Office estimates that about 750,000 employees will be furloughed at a cost per day of $400 million in lost compensation. That in turn has the potential to affect spending and may have a negative impact on the economy.

Traders are concerned that the shutdown would delay the release of Friday’s nonfarm payrolls data by the Bureau of Labor Statistics. Economic data over the past month has shown that the labor market is slowing down while inflation is relatively under control – though still above the Fed’s 2% target.