By Michelle Ndaga
Global financial markets moved higher on Monday, even as uncertainty loomed over a potential U.S. government shutdown. Investors shifted focus to safe-haven assets, pushing gold prices to historic highs while the U.S. dollar weakened and Treasury yields fell.
The MSCI All-World Index edged up 0.16%, while Europe’s STOXX 600 rose 0.3%, lifted by gains in healthcare and technology stocks. U.S. futures also pointed upward, with S&P 500 futures rising 0.6% and Nasdaq futures up 0.67%, reflecting cautious optimism despite political uncertainty.
Gold surged to a record $3,819.59 per ounce, as investors sought refuge amid growing fears of a federal funding lapse. The U.S. dollar declined against major currencies, with analysts at MUFG expecting continued weakness into the year’s end. U.S. 10-year Treasury yields dropped to 4.145%.
At the heart of the market’s volatility is the rising threat of a government shutdown. If Congress fails to pass a temporary funding bill, critical economic data—such as jobs reports—could be delayed, potentially complicating the Federal Reserve’s upcoming rate decision at its October 29 meeting.
President Trump is expected to meet with congressional leaders in a last-minute bid to reach a funding deal, with new tariffs reportedly on the table if negotiations fail.
In sector developments, European pharmaceutical giant GSK rose on leadership news, while AstraZeneca’s reaffirmation of its London headquarters boosted investor confidence. However, banking stocks lagged behind, with Commerzbank and BPER Banca posting losses. Oil prices dipped, with Brent crude falling 1.65% to $68.97 and U.S. crude down 2% to $64.44, pressured by renewed Kurdish oil flows and anticipation of increased OPEC+ output.
Looking ahead, markets are pricing in a 90% chance of a Fed rate cut in October, but that outlook could shift dramatically if a shutdown delays key economic indicators. While a full default remains unlikely, even a temporary lapse in funding could send shockwaves through global markets.
As negotiations continue in Washington, investors will be watching closely not just for a deal, but for clarity on economic releases and monetary policy amid growing uncertainty.
