North American Morning Briefing: Stock Futures Fall as Government Shutdown Begins

Stocks

Summary:

U.S. stock futures fell as a government shutdown began, pressuring markets. Dollar and equities weakened, gold surged as a safe haven, and potential data delays raised odds of a Fed rate cut.

OPENING CALL

Stock futures declined with investors on edge as the government shutdown began.

"Historically shutdowns have been bad for the dollar, bad for equities, and bad for bonds too," Hargreaves Lansdown said. "This is an unwelcome event for a market that has been on a tear since the tariff-induced lows of April, and had been building positive momentum thanks to the AI boom, a Federal Reserve rate cut and a near end to tariff uncertainty."

Danske Bank said the direct economic impact is expected to be limited but markets will likely focus on potential delays to the publication of data , particularly Friday's nonfarm payrolls report, and possible layoffs of public sector workers.

"While these factors might not significantly alter the macroeconomic outlook, they could, all else being equal, modestly increase the likelihood of the Fed considering a rate cut in October."

The latest data pointed to lackluster labor market conditions , boosting expectations for further interest-rate cuts in the coming months.

The ADP private employment report is expected today , which may be the only broad national measure of job growth that markets get for a while.

Stocks to Watch

Acuity, Cal-Maine Foods and Conagra Brands are expected to report results before the bell.

AES: BlackRock-owned Global Infrastructure Partners is nearing a $38 billion takeover of the utility group, according to a media report. AES shares shot up 14% premarket.

A U.S. court dismissed Arm's allegation that a Qualcomm unit violated a licensing agreement. Arm shares fell around 2% before the bell.

GEO Group received a contract from Immigration and Customs Enforcement for continued provision of electronic monitoring and supervision services. The stock rose 4% after the bell.

The U.S. government said Tuesday it would take a 5% stake in both Lithium Americas and its Nevada mining project. Shares jumped by roughly one-third in premarket trading.

Nike posted a surprise sales increase for last quarter, but raised its tariff-cost forecast to $1.5 billion this fiscal year. Shares climbed 3% ahead of the open.

Warren Buffett's Berkshire Hathaway is in talks to buy Occidental's petrochemical unit for around $10 billion. Occidental shares rose over 1% in premarket trading.

Watch For:

U.S. ADP National Employment Report for September; U.S. ISM Report on Business Manufacturing PMI for September; EIA Weekly Petroleum Status Report; Federal Reserve Bank of Richmond President Thomas Barkin speaks at the University of North Carolina

Today's Top Headlines/Must Reads:

- How Trump's Drug-Buying Site 'TrumpRx' Will Work

- ETFs Are Flush With New Money. Why Billions More Are Flowing Their Way.

- A Once Unstoppable Luxury Housing Market Is Starting to Crack

MARKET WRAPS

Forex:

The dollar fell against a basket of currencies following the government shutdown.

It could weaken further as investors are fearful that this could be longer than previous shutdowns , ING said.

That could weigh further on consumer confidence and job security, especially if Trump follows through on his threats to fire non-essential government staff, it said.

The euro remained higher against the dollar , barely moving after eurozone inflation rose in line with expectations in September.

Bonds:

Treasury yields rose as the government shutdown began.

Treasury operations remained unaffected as the debate isn't linked to the debt ceiling this time, Julius Baer said.

"As such, unless prolonged, the event is politically highly sensitive but unlikely to disrupt bond markets by itself significantly."

MainSky said that Treasurys are the clear winners when looking at the three shutdowns lasting more than 14 days.

"Yields on ten-year Treasury bonds have fallen during all shutdowns," it said. "The uncertainty creates demand for safe assets."

Energy:

Oil prices edged higher in early trade, before turning lower.

"September marked a second straight monthly drop for crude, reflecting persistent supply concerns," MUFG said.

Metals:

Gold prices climbed to a fresh record as investors turned to safe-haven assets.

Gold Chart

Comex gold futures were on track to test resistance at $4,000/oz, RHB Retail Research said, according to the daily chart.

The "higher high" closing, together with the relative strength index pointing upward, reaffirmed strong bullish momentum is in play.

Copper

Copper remained largely flat , supported by concerns over risks to supply.

A mudslide at the Grasberg mine in Indonesia has worsened the supply outlook, taking 3% of global mine supply offline, ANZ said. China's crackdown on excess competition and overcapacity was also expected to reduce refined copper production.

TODAY'S TOP HEADLINES

The Company Founders Who Think They Need Not One but Two Successors

Finally convinced it is time to step aside, company founders often decide it takes two people to fill their big shoes-despite the mixed record of companies led by co-CEOs.

Spotify's Daniel Ek is the latest entrepreneur to be succeeded by a pair of chief executives. The music streaming giant announced Tuesday that co-presidents Alex Norström and Gustav Söderström will become its co-CEOs on Jan. 1. Oracle, founded by Larry Ellison, just announced its second pair of co-CEOs in 11 years. Comcast, too, picked a co-CEO to join longtime leader Brian Roberts, whose father founded the media company in 1963.

Inside EY's U.S. Auditing Cleanup to Reduce Shortfalls

Ernst & Young expects to achieve its lowest U.S. auditing shortfall rate in 16 years after working to improve its practices by shedding dozens of audit clients, setting up centralized support teams and relying more on tech tools.

Auditing deficiencies are expected to be at or below 9% this year for EY as the Public Company Accounting Oversight Board wraps up its inspections process for the Big Four accounting firms, people familiar with the matter said.

Lower Rates Could Help These Unloved Bank Stocks Shine

Things are shaping up for regional banks.

Shares of smaller lenders have had a poor run against their bigger peers in recent years. The KBW Nasdaq Bank Index, which tracks 24 of the largest U.S. lenders, is up almost 20% so far this year. The KBW Nasdaq Regional Banking Index, which tracks 50 smaller lenders, is up only 1%. The performance gap was over 20 percentage points in 2024.

Today's ADP Jobs Data Will Matter. The Government Shutdown Might Delay BLS's Numbers.

Economists expect the latest data to show that September proved to be another weak month for hiring in the private sector.

The monthly ADP National Employment Report for September is set to be released at 8:15 a.m. Eastern on Wednesday. Economists surveyed by FactSet expect that the U.S. private employers added 50,000 jobs in September. That's down slightly from the 54,000 positions that ADP reported in August, with sectors such as leisure and hospitality and construction gaining ground despite the broader slowdown in hiring.

Eurozone Inflation Picks Up Pace as ECB Looks Set to Keep Rates on Hold

Annual inflation accelerated in the eurozone last month, cementing expectations that the European Central Bank will leave its key interest rate unchanged for what is left of this year.

Consumer prices were 2.2% higher than a year earlier in September, picking up pace from the 2.0% rate of inflation booked in August, and in line with economists' expectations. Stronger-than-expected rises in inflation in key economies like Germany pushed the rate higher for the 20-nation currency union as a whole. Energy prices fell at less sharp rate on year in September than they did in August, contributing a large part of the headline rise in inflation across the eurozone.

Powerful Earthquake Kills at Least 69 People in Central Philippines

A powerful earthquake collapsed buildings and set off several landslides in the central Philippines, killing at least 69 people and injuring hundreds more, officials said Wednesday.

The 6.9-magnitude quake struck just before 10 p.m. local time Tuesday in the waters off Bogo City on the island of Cebu, according to the U.S. Geological Survey, and sent shock waves through a region still recovering from a powerful tropical storm that hit a few days ago.

White House Withdraws Nominee to Lead Bureau of Labor Statistics

WASHINGTON-The White House withdrew the nomination of conservative economist E.J. Antoni to run the Bureau of Labor Statistics, according to people familiar with the decision.

A White House official praised Antoni and said the president will soon nominate a new candidate to lead BLS.

Attorneys for Tony Hsieh's Family Find Few Clues About Surprise Will

Attorneys for the tech entrepreneur Tony Hsieh's family have searched his calendar, dug through business records and reviewed estate-planning documents for any clues about the origins of a mysterious will that surfaced earlier this year.

Among the few details they have uncovered are postmarkings on two envelopes that arrived at a Las Vegas courthouse earlier this year related to the purported will, the attorneys said in a filing last week. One envelope was mailed from Greenwich, Conn., with a Las Vegas return address. Another was mailed from Fairless Hills, Pa., with a return address in Cheyenne, Wyo.

Source: morningstar

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Warren Takunda

Economic

With taxes set to be ratcheted up again, businesses are concerned they will be hit hardest, as was the case with the 2024 budget.

"Business confidence has plumbed new depths in September, following a fleeting improvement at the tag-end of summer. Conditions worsened across the board, with cost expectations hitting a record high, driven notably by employment costs," says Anna Leach, Chief Economist at the Institute of Directors.

The IoD Directors' Economic Confidence Index, which measures business leader optimism in prospects for the UK economy, fell to -74 in September 2025 from -61 August.

This exceeds the recent record low of -72 in July 2025 and marks the lowest reading of the Index since its introduction in July 2016.

"Investment expectations declined again, although remained somewhat above the most recent low in November 2024. Meanwhile headcount expectations continue to seesaw as the effects of the April rises in employment taxes and the living wage, alongside future concerns over employment regulations, continue to reverberate across companies," says Leach. New Record Low for UK Business Confidence_1

New Record Low for UK Business Confidence_1

Businesses investment and confidence are a key driver of economic growth, and these findings paint a subdued picture of the UK economic outlook into year-end.

Any hopes that inflation will fall notably in the coming months are compromised by businesses reporting their cost expectations rose to +89 in September 2025, from +85 in August.

This is the highest reading of the indicator since its introduction in November 2017 and exceeds the previous series high recorded in February 2025 (+87).

Linked to cost expectations are wage expectations, a key driver of inflation, which jumped to +64 from +42 in September.

The Bank of England could keep interest rates unchanged until 2026 on account of rising inflation, which is expected to peak at double the 2.0% target rate this September.

It suggests the cost of borrowing for businesses is unlikely to fall materially for the foreseeable future.

The jobs market has meanwhile deteriorated in recent months, and the indication from businesses is that no turn for the better is likely soon.

The IoD's measure of headcount expectations fell to -13, from -4.

"Persistent fears that taxes on business and assets will rise are stifling confidence, holding back investment, and threatening growth and living standards," says Leach.

"Business leaders are calling for a reduction in government-generated costs – whether through a lower tax burden or lighter regulation. But crucially they are seeking a more coherent and credible plan for growth," she adds.

Source: Poundsterlinglive

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Michelle

Economic

Forex

Payrolls at US companies unexpectedly dropped in September, due at least in part to issues with data analysis.

Private-sector payrolls decreased by 32,000 after a revised 3,000 decline a month earlier, according to ADP Research data released Wednesday. The median estimate in a Bloomberg survey of economists called for a 51,000 gain.

ADP uses an expansive data set from the Bureau of Labor Statistics, called the Quarterly Census of Employment and Wages, to gauge the nationwide distribution of employment across industries, states and establishment size. The QCEW is based on state unemployment insurance tax records and covers nearly all US jobs.

This recalibration resulted in a reduction of 43,000 jobs in September compared to pre-benchmarked data, the report said. However, ADP said the trend was unchanged and job creation continued to lose momentum across most sectors.

Source: Bloomberg Europe

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Warren Takunda

Stocks

London stocks had extended gains by midday on Wednesday, hitting a new record high amid strength in the pharmaceutical sector, as investors mulled a shutdown of the US federal government.

The FTSE 100 was up 0.7% at 9,415.30.

Richard Hunter, head of markets at Interactive Investor, said: "Washington may have turned the lights out, but investors bypassed the political noise to send the Dow Jones to a new record high.

"Nonetheless, there are some implications which are difficult to avoid, such as the possibility of mass layoff of federal workers which would put extra strain on an already anaemic labour market. Apart from the fact that the non-farm payrolls report may not now be released on Friday, which hampers the Fed’s visibility on the latest state of play, any shutdown lasting more than the usual couple of weeks would leave some shifting uncomfortably in their chairs.

"In the meantime and by default, other employment data takes on extra significance. The job openings report yesterday highlighted weakness in hiring new staff, while today’s ADP report could highlight further weakness with the addition of a modest 50,000 jobs expected."

On home turf, a survey showed that activity in the manufacturing sector contracted at the fastest pace in five months September.

The S&P Global manufacturing purchasing managers’ index dropped to 46.2 from 47.0 in August, remaining below the 50.0 mark that separates contraction from expansion for the twelfth month in a row.

S&P noted that four of the five PMI components - output, new orders, employment and stocks of purchases - were consistent with a deterioration in operating conditions.

Manufacturing production declined for the eleventh month in a row in September, at the fastest pace since March, with the consumer, intermediate and investment goods sectors all seeing output fall at solid rates.

Manufacturers said production had been scaled back due to weaker intakes of new business, with demand from both domestic and export markets weak.

The survey also found that new order intakes subsequently fell for the twelfth month in a row, and to one of the greatest extents in the past two years.

This was put down to subdued client confidence, US tariff uncertainty and the consequences of a high cost backdrop, in particular for energy and staff. There were also reports that automotive supply chains disrupted due to production shutdowns at Jaguar Land Rover.

Meanwhile, the latest data from Nationwide showed that house prices nudged higher in September, as the market continued to shake off wider economic uncertainty.

In equity markets, pharmaceuticals were the standout gainers, with AstraZeneca, Hikma, GSK and Haleon all higher.

The gains came after Pfizer struck a deal with US President Donald Trump to cut US drug prices. As part of the deal, in exchange for Pfizer committing to a $70bn investment in manufacturing and research in the US, it will be exempt from pharmaceutical tariffs for three years.

Trump announced plans on Tuesday to launch a government-run website, dubbed TrumpRx, for consumers to buy drugs directly from manufacturers.

JPMorgan said in a research note: "Overall, we see Pfizer’s agreement on Most Favoured Nation as a potential bellwether for the sector which, we anticipate is likely to be replicated by EU Pharma companies and should therefore result in a broadly manageable impact from MFN on EU Pharma, reassuring investors."

Russ Mould, investment director at AJ Bell, said: "It looks like investors are regaining confidence in the pharma sector following recent uncertainty around pricing and tariffs. More clarity on both points is helping to regain investors’ interest."

JD Sports advanced after Nike’s first-quarter earnings beat expectations.

Greggs surged as the bakery chain Greggs reported a slowdown in sales, pinning the blame partly on a "heat-affected" July, but reiterated its outlook for the full year.

Dan Coatsworth, head of markets at AJ Bell, said: "The fact life hasn’t got any worse for Greggs was enough to breathe some life into the share price. It says trading has improved over the past few months, it is getting cost pressures under control, and full-year guidance has been maintained.

"Don’t be fooled into thinking the king of sausage rolls is sitting upright on its throne, with nothing to worry about. The share price jump is a mixture of relief and a short squeeze, not a celebration of significant progress.”

He said LFL sales are "still pedestrian" and there is "a nagging feeling that Greggs is growing too fast in the face of fierce headwinds".

Taylor Wimpey was little changed as the housebuilder reiterated its guidance for 2025 after a "robust" sales performance over the third quarter, but said it was mindful of various issues currently affecting customer sentiment, such as the impact of the delayed autumn budget.

Tate & Lyle tanked as it downgraded its full-year profit and revenue expectations, while Howden Joinery fell after shareholder Invesco Asset Management placed about 20.1m shares in the company at 825p each.

Source: Sharecast

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Samantha Luan

Economic

Forex

Political

US Immigration and Customs Enforcement (ICE) agents, along with other federal law enforcement agencies, attend a pre-enforcement meeting in Chicago, Illinois, US, on Sunday, Jan. 26, 2025. President Donald Trump has pledged to carry out the largest deportation effort in US history, vowing to ultimately deport all of the foreigners living in the country without permission.

US Immigration and Customs Enforcement (ICE) agents, along with other federal law enforcement agencies, attend a pre-enforcement meeting in Chicago, Illinois, US, on Sunday, Jan. 26, 2025. President Donald Trump has pledged to carry out the largest deportation effort in US history, vowing to ultimately deport all of the foreigners living in the country without permission. Photographer: Christopher Dilts/BloombergA US citizen filed suit against the federal government alleging he was improperly arrested and detained twice by immigration officials as they unlawfully targeted Latino workers at Alabama construction sites, despite providing them with his proof of legal status.

The case, filed on Tuesday in federal court as a potential class action, was brought on behalf of Leonardo Garcia Venegas, an American-born construction worker who claimed he’s been detained twice this year during workplace raids. During one incident, Garcia Venegas alleged that officers initially dismissed his identification document as “fake” and kept him in handcuffs for more than an hour.It’s the latest case to accuse the Trump administration of illegally detaining people based on the fact that they appear to be Latino or are located in certain places, such as construction sites or outside home improvement stores — as opposed to specific evidence that they lack legal status to be in the country.

The Justice Department has defended the lawfulness of President Donald Trump’s hard-line immigration policies and the US Supreme Court’s conservative majority earlier this month voted to let federal agents continue to make mass arrests in Los Angeles in a way that critics contend crosses the line into racial profiling.DHS Assistant Secretary Tricia McLaughlin said in a statement that allegations of racial profiling “are disgusting, reckless, and categorically FALSE.”

“Under the fourth amendment of the U.S. Constitution, DHS law enforcement uses ‘reasonable suspicion’ to make arrests,” McLaughlin said. “There are no ‘indiscriminate stops’ being made. The Supreme Court recently vindicated us on this question. DHS enforces federal immigration law without fear, favor, or prejudice.”According to the complaint, Garcia Venegas was detained during two separate immigration enforcement actions at construction sites in May and June. Both times, he alleged, officers refused to accept his Alabama-issued “STAR ID” driver’s license, which requires proof of citizenship or other lawful residency to obtain.

Garcia Venegas was eventually released after officers verified his status. The second detention lasted between 20 and 30 minutes, according to the lawsuit.“Immigration officers, wielding an overly broad grant of authority but no warrant, raided the private construction sites where Leo was working and rounded up all the workers who looked Latino — even citizens, like Leo, who had done nothing wrong,” his lawyers wrote. “Leo deserves better. And under the Fourth Amendment and federal laws that constrain immigration enforcement, he is entitled to better.”

Garcia Venegas attorneys say they’ll argue to have the case certified as a class action on behalf of US citizens or other lawful residents in southern Alabama working in construction who might be detained as a result of the administration’s policies.The lawsuit was filed in the federal court in Mobile, Alabama, by the Institute for Justice, a libertarian public interest group.

Source: Yahoo Finance

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Glendon

Commodity

In an oil and gas report sent to Rigzone by the Macquarie team this week, Macquarie strategists, including Walt Chancellor, revealed that they are forecasting that U.S. crude inventories will be down by 1.5 million barrels for the week ending September 26.

“This follows a 0.6 million barrel draw in the prior week, with the crude balance realizing looser than our expectations,” the strategists said in the report.

“For this week’s balance, from refineries, we model a moderate reduction in crude runs (-0.3 million barrels per day) following a strong print last week,” they added.

“Among net imports, we model a significant reduction, with exports (-0.3 million barrels per day) and imports (-0.8 million barrels per day) lower on a nominal basis,” they continued.

The strategists went on to warn in the report that the timing of cargoes remains a source of potential volatility in this week’s crude balance.

“From implied domestic supply (prod.+adj.+transfers), we look for a small increase (+0.15 million barrels per day) on a nominal basis this week,” the strategists said in the report.

“We continue to believe strong implied domestic supply Q3-to-date remains an underappreciated theme,” they noted.

“Rounding out the picture, we anticipate a larger increase (+0.7 million barrels) in SPR [Strategic Petroleum Reserve] stocks this week,” they stated.

The Macquarie strategists went on to note that “among products” they “look for a build in gasoline (+1.4 million barrels), with distillate (+0.1 million barrels) and jet (down minimally) nearly flat”.

“We model implied demand for these three products at ~14.2 million barrels per day for the week ending September 26,” the strategists said.

In its most recent weekly petroleum status report at the time of writing, which was released on September 24 and included data for the week ending September 19, the U.S. Energy Information Administration (EIA) highlighted that U.S. commercial crude oil inventories, excluding those in the SPR, decreased by 0.6 million barrels from the week ending September 12 to the week ending September 19.

That EIA report showed that crude oil stocks, not including the SPR, stood at 414.8 million barrels on September 19, 415.4 million barrels on September 12, and 413.0 million barrels on September 20, 2024.

“At 414.8 million barrels, U.S. crude oil inventories are about four percent below the five year average for this time of year,” the EIA said in that report.

Crude oil in the SPR stood at 406.0 million barrels on September 19, 405.7 million barrels on September 12, and 381.9 million barrels on September 20, 2024, the EIA report revealed. Total petroleum stocks - including crude oil, total motor gasoline, fuel ethanol, kerosene type jet fuel, distillate fuel oil, residual fuel oil, propane/propylene, and other oils - stood at 1.687 billion barrels on September 19, the EIA report highlighted. Total petroleum stocks were down 0.2 million barrels week on week and up 38.0 million barrels year on year, the EIA report showed.

In an oil and gas report sent to Rigzone by the Macquarie team on September 22, Macquarie strategists revealed that they were forecasting that U.S. crude inventories would be down by 3.3 million barrels for the week ending September 19.

“This follows a 9.3 million barrel draw in the prior week, with the crude balance realizing tighter than our expectations,” the strategists stated in that report.

The EIA’s next weekly petroleum status report is scheduled to be released on October 1. It will include data for the week ending September 26. The report states that it provides timely information on supply and selected prices of crude oil and principal petroleum products.

Source: Rigzone

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Michelle

Economic

Asia excluding China has attracted about US$100 billion (RM420.9 billion) in capital inflows over the past nine months as global investors diversify beyond the United States, Kevin Sneader, Goldman Sachs' president for Asia-Pacific ex-Japan, said on Wednesday.

Japan has been a key beneficiary of the trend, while China’s equity rally since late last year has been driven mainly by domestic investors and interest in the technology sector, with foreign funds now taking another look at China, he said.

"There is incremental flow in this part of the world,” Sneader said at the Milken Institute Asia Summit 2025 in Singapore. "I think it's important to put it in the context of a diversification movement, not an exit movement."

"I think we should be cautious and not get too excited because part of that money is what I call global hedge fund money, the faster money," he said.

"The mutual funds, longer investors, that money's still not flowing back into China. But they're certainly taking a hard look at Asia," he added.

Sneader said the technology, consumer discretionary and industrial sectors are attracting strong interest in Asia, with healthcare gaining traction in private markets.

The chief executive of Singapore state-owned investor Temasek, Dilhan Pillay, speaking at the same event, said that “globalisation as we have known it is gone”, as geopolitics, tariffs and energy constraints have reshaped returns.

"Reconfiguration of supply chains to (prioritise) resilience over efficiency, there's a cost for resilience," he said.

Pillay added that artificial intelligence is "the most pervasive thing across the political, social and economic spectrum."

Temasek, which manages a S$434 billion portfolio, reported an 11.6% rise in net portfolio value to a record high as of March 31, with the US continuing to be its largest destination for capital.

Singapore sovereign wealth fund GIC's Head of Funds and Co-investments, Asia, Private Equity Ankur Meattle said China is seeing more deal activity, including multinationals exploring capital options and succession driven sales, alongside innovation in sectors from biotech to electric vehicles.

"With the capital markets in a better place, one is likely to see some exits also. So there is a pipeline of exits building up that we should see in the next six months," he said.