Finance
US, European stocks hit record highs as investors shrug off US shutdown impact
Published by Global Banking and Finance Review
Posted on October 2, 2025
4 min readLast updated: January 21, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on October 2, 2025
4 min readLast updated: January 21, 2026
US and European stocks reached record highs as investors shrugged off the US government shutdown, focusing instead on potential Federal Reserve rate cuts.
By Iain Withers and Koh Gui Qing
NEW YORK/LONDON (Reuters) -Global stocks gained and gold traded near record highs on Thursday as investors took in their stride the potential ramifications of a U.S. government shutdown, while a weak private U.S. labor market report bolstered bets for Federal Reserve rate cuts.
Investors have been largely sanguine about the shutdown's impact on the markets and economy, helped by data of past shutdowns that showed limited fallouts. Morgan Stanley, for example, said U.S. share prices have risen an average 4.4% while real U.S. economic growth has expanded 2.2% during shutdowns in the past.
Instead, investors are focused on how much the Federal Reserve might lower interest rates this year, and whether the roaring U.S. stock market is due for a short-term pullback in the near future.
Nicholas Colas and Jessica Rabe, co-founders of DataTrek Research, said sector sub-indices for the S&P 500 index are showing a marked correlation with downside risks.
"Every other time they have done so since 2023, the S&P has declined by 5-18% in the following weeks," Colas and Rabe said. "This is not an outright 'sell' signal, but history says to be selective here."
The S&P 500, which has risen 14% so far this year, was flat after briefly touching a record high of 6,731.94 points. The Nasdaq Composite gained 0.3% after also hitting an all-time high of 22,900.60 points, while the Dow Jones Industrial Average was also little changed.
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 ADP employment report that showed 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
The MSCI's broadest index of global stocks was up about 0.1% on Thursday, after European stocks hit another record high, up about 0.5%.
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 SK Hynix inked partnerships to supply OpenAI data centres.
Gold , which have been buoyed by a combination of Fed easing bets and some shutdown angst, took a breather and slipped 0.5% after reaching another all-time high of $3,895.09 overnight.
The two-year Treasury yield sank to a two-week low of 3.531% overnight, and was last at 3.5449%.
"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 a one-week low of 97.459 reached overnight. It last stood at 97.864, up 0.1% from Wednesday's closing level.
The dollar was little changed against the yen at 147.165 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 dipped 0.1% to $1.1717, while sterling fell 0.3% at $1.3441.
Oil prices edged lower on Thursday, extending a run of declines into a fourth day due to concerns about oversupply in the market. [O/R]
Brent crude futures fell 1.8% to $64.18 a barrel, and U.S. West Texas Intermediate crude also dipped 1.9% to $60.6 a barrel.
(Reporting by Iain Withers in London and Kevin Buckland in TokyoEditing by Deepa Babington and Nick Zieminski)
Interest rates are the cost of borrowing money or the return on savings, expressed as a percentage. They are influenced by central bank policies and economic conditions.
The stock market is a collection of markets where shares of publicly held companies are bought and sold. It serves as a platform for raising capital and investing.
Economic growth refers to an increase in the production of goods and services in an economy over time, often measured by GDP.
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