European Shares To Open On Cautious Note Amid US Government Shutdown

(RTTNews) - European stocks are seen opening on a muted note Wednesday after the U.S. government shutdown commenced at midnight, forcing agencies to suspend all but essential operations.

After Congress failed to pass a budget in time to fund several federal agencies, leaders of both the Republican and Democratic parties have insisted that they are not to blame for the halt in funding.

The first government shutdown since 2019 would delay the release of key economic reports — including jobs and inflation data — used to gauge the direction of the economy and the Federal Reserve's interest rate decisions.

Investors are already wary about a slowing labor market, the risk of stagflation and elevated stock valuations, and it is feared that the shutdown could prompt rating agencies to rethink the strength of U.S. credit rating, which was downgraded in May by Moody's.

Asian stocks were mixed, with Chinese and Hong Kong markets closed for a holiday. The dollar hovered near a one-week low versus major peers, helping gold prices surge to a record high of $3,865 per ounce.

Oil ticked higher in Asian trade, as a draw in U.S. crude inventories helped stabilize markets after two days of sharp losses fueled by oversupply concerns.

Overnight, U.S. stocks rose for a third straight session as investors took the prospect of a government shutdown in their stride.

In economic releases, U.S. consumer confidence plummeted in September to its lowest since April, while job openings were little changed in August and hiring was subdued, separate set of data revealed. The Dow edged up 0.2 percent to hit a record closing high.

The tech-heavy Nasdaq Composite and the S&P 500 rose 0.3 percent and 0.4 percent, respectively to notch their best third quarter since 2020 and their best September performance since 2010.

European stocks rose on Tuesday to conclude September on a positive note. The pan European Stoxx 600 gained half a percent.

The German DAX rose 0.6 percent, France's CAC 40 inched up by 0.2 percent and the U.K.'s FTSE 100 added half a percent.