US Stocks Slide as Government Shuts Down and Payrolls Disappoint

With US politicians failing to reach a budget deal, the US Government has started to shut down, negatively impacting sentiment toward US equities. US index futures are down 0.3% to 0.5%, giving back all of yesterday’s 0.2%-0.4% index gains and more. Equity markets in other parts of the world, meanwhile, have kicked off October with rallies with the Dax up 0.4%, the FTSE up 0.7%, and the Hang Seng up 0.9%.

Gold is 1.0% trading at another record high above $3,900/oz, while Silver is up 1.9% trading near $47.50/oz. Cryptocurrencies are also climbing with Bitcoin up 2.2% and Ether up 4.0%. The combined action across equities and currencies suggests that some capital has started to seek havens outside of the United States.    

Disappointing data out of the US has not helped confidence. ADP payrolls declined outright last month (-32K vs street +50K) and August private sector payrolls were revised downward too (-3K vs previous +54K). The US 10-year treasury note yield has dipped back toward 4.10% on this news and the US Dollar has started to sink further, enabling the Euro to gain 0.2% and the Pound to rally 0.5%. The Loonie is steady this morning.

Yesterday’s US Chicago PMI (40.6 vs street 43.0) was also troubling. US ISM Manufacturing PMI (street 49.0) is due at 10:00 am EDT. Manufacturing PMI reports from Europe, Australia and Asia were a mixed bag overnight.

Commodity action is mixed amid all of this uncertainty. Crude Oil is down 0.7%, while Copper is up 0.5%.

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