By Iain Withers and Kevin Buckland
LONDON/TOKYO (Reuters) -Global stocks gained and gold traded near record highs on Thursday as investors digested the potential ramifications of a U.S. government shutdown, while a weak private U.S. labour market report bolstered bets for Federal Reserve rate cuts.
A protracted U.S. government shutdown could mean that the release of key official data on employment and inflation is delayed or disrupted, clouding the picture on the health of the world’s biggest economy and the path for interest rates.
A monthly payrolls report seems unlikely now to be released on Friday, putting an overnight ADP employment report that shows the economy unexpectedly shed jobs in September into sharper focus. Traders are now pricing in two quarter-point Fed rate cuts by the end of the year as almost a done deal.
“I hope they sort this out rapidly,” said Kevin Thozet, investment committee member at asset manager Carmignac, referring to the government shutdown, adding that inflation data was also due ahead of the Fed’s next meeting.
“It’s like a blind man walking with a blind dog,” he said.
SHUTDOWN ANGST HURTS DOLLAR, BOOSTS GOLD
While U.S. stocks have performed well, he added, uncertainty about the credibility of U.S. institutions more generally has manifested in a weaker dollar.
The MSCI’s broadest index of global stocks was up about 0.25% on Thursday, after European stocks hit another record high, up about 0.6%.
Wall Street futures were also up between 0.2 and 0.4%.
Tech shares in Asia had earlier rallied, helping drive up the region’s stock indexes, partly lifted by news that South Korean chip heavyweights Samsung and Hynix inked partnerships to supply OpenAI data centres.
The combination of Fed easing bets and some shutdown angst pushed gold to a fresh all-time high of $3,895.09 overnight, while also supporting U.S. Treasuries, sending yields sharply lower.
The two-year Treasury yield sank to a two-week low of 3.531% on Thursday, and was last at 3.5408%.
Gold paused for breath, last changing hands at around $3,869.
“As is often the case, fresh highs are likely to beget yet more fresh highs here, with momentum still firmly with the bulls, and the fundamental case for further upside in PMs (precious metals) a solid one too,” said Michael Brown, senior research strategist at Pepperstone.
The U.S. dollar index, which tracks the currency against six major peers, languished near the one-week low of 97.459 reached overnight. It last stood at 97.578, down 0.1% from Wednesday’s closing level.
The dollar was little changed at 146.975 yen, after Bank of Japan Deputy Governor Shinichi Uchida signalled confidence that conditions for another interest rate hike were falling into place, in remarks at an industry event.
The euro rose slightly to $1.1752, while sterling edged up to $1.35.
Oil prices rose on prospects of tighter sanctions on Russian crude, looking to snap a three-day losing streak to 16-week lows.
Brent crude futures gained 0.2% to $65.48 a barrel, and U.S. West Texas Intermediate crude added 0.2% to $61.90 a barrel.
(Reporting by Iain Withers in London and Kevin Buckland in TokyoEditing by Shri Navaratnam, Lincoln Feast and Gareth Jones)
