US Markets Edge Up Despite Government Shutdown; NZ Awaits Rate Decision

US markets showed slight gains on Friday, defying the ongoing government shutdown that has raised concerns among investors. The shutdown has halted the release of key economic data, such as the September nonfarm payrolls report, and prompted President Donald Trump to threaten significant layoffs. According to the Congressional Budget Office, approximately 750,000 federal workers are expected to be furloughed each day while the shutdown continues.

In New York, the S&P 500 increased by a mere 0.01%, while the Dow Jones rose by 0.51%. The Nasdaq, however, saw a decline of 0.28% as the shutdown stretched into its third day. Despite these fluctuations, all three major indexes finished the week positively, with the S&P 500 and the Dow both gaining 1.1% and the Nasdaq advancing 1.3%.

European and Asian Markets React Differently

European markets demonstrated resilience, with the pan-European Stoxx 600 index closing up 0.5%—marking its fifth consecutive day of gains. In Asia, results were mixed; Japan’s Nikkei closed up 1.85% following a surge in shares of Hitachi, which announced a partnership with OpenAI to develop artificial intelligence infrastructure globally. Conversely, Hong Kong’s Hang Seng fell by 0.54%, while India’s Nifty 50 remained flat. Both the Chinese and South Korean markets were closed for holidays.

In New Zealand, attention is focused on the upcoming decision by the Reserve Bank regarding interest rates, set to be announced on Wednesday. Economists are divided on the anticipated cut to the official cash rate (OCR), with expectations ranging from a 25 basis points to a 50 basis points reduction. On Friday, the S&P/NZX 50 Index rose by 0.46%, buoyed by gains in significant companies such as Infratil and Fisher & Paykel Healthcare.

Several stocks made notable moves, including Savor Group, which gained 7.53% after a significant investment from businessman Philip Bowman. Refrigerant technology firm AoFrio rose 7.32% despite a downgraded earnings forecast. In contrast, WasteCo and NZME experienced declines, dropping 5.56% and 4.72%, respectively.

Global Economic Developments

In Sydney, the S&P/ASX 200 rose by 0.46% on Friday, led by Eagers Automotive, which surged 15.28% after announcing plans to invest A$1 billion to acquire 65% of Canadian firm OneAuto. Digico Infrastructure also gained, climbing 11.72% following the securing of substantial government and enterprise contracts.

A significant development in the oil market occurred as the Organization of the Petroleum Exporting Countries (OPEC) and Russia announced an increase in oil output targets by more than 2.7 million barrels per day. This adjustment, equating to 2.5% of global demand, aims to address supply concerns and regain market share lost to US competitors.

During an address at Italian Tech Week in Turin, Goldman Sachs CEO David Solomon expressed concerns about a potential stock market downturn, predicting a challenging period ahead. He highlighted the risks posed by new technologies, particularly in artificial intelligence, urging caution among investors.

Additionally, Berkshire Hathaway has agreed to a US$9.7 billion cash deal to acquire OxyChem, the chemical division of Occidental Petroleum. This acquisition marks Berkshire’s largest deal since 2022 and may be the last major transaction for Warren Buffett as CEO.

Looking ahead, the upcoming week will be pivotal for the New Zealand economy, particularly with the anticipated interest rate decision and ongoing scrutiny of parking breach notices by local authorities. The Health Select Committee will also convene privately to discuss the Gene Technology Bill, further underscoring the week’s busy agenda.