US Markets Pull Back as Government Shutdown Hits Investor Sentiment

On Thursday, Wall Street experienced a notable retreat from record highs, with the S&P 500 and Nasdaq both declining by 0.3%, while the Dow Jones fell by 0.4%. This decline comes as the US government shutdown entered its ninth day, raising concerns among investors about potential economic impacts if the impasse continues.

Market Reactions in the US and Europe

The ongoing government shutdown has left investors wary about future economic growth. The S&P 500 and Nasdaq showed signs of weakness after reaching midday highs, reflecting a broader apprehension regarding fiscal stability. European markets mirrored this trend, with the pan-European Stoxx 600 index also dropping by 0.3%. This decline was led by significant losses in shares of Danish pharmaceutical giant Novo-Nordisk A/S as banks in the region moved to sell off private subsidiaries.

In contrast, Asian markets mostly advanced, buoyed by investor optimism surrounding artificial intelligence and technology stocks. Japan’s Nikkei rose by 1.14%, while the Shanghai Composite Index increased by 0.37% and the Shenzhen Index climbed by 0.69%. Despite these gains, Hong Kong’s Hang Seng Index fell by 0.62%, and South Korean markets remained closed for a public holiday.

Key Developments in New Zealand and Australia

In New Zealand, the S&P/NZX 50 Index edged up slightly by 0.02% amid the release of various economic data. The government’s annual accounts were less negative than anticipated, while the Accident Compensation Corporation (ACC) reported a $1.5 billion deficit for the year ending in June, bringing its total deficit to $13.8 billion.

Several companies made significant movements on the stock exchange. Ryman Healthcare reported a second-quarter trading update indicating that it is on track to exceed its full-year guidance, causing its share price to rise by 3.56%. On the other hand, Cooks Coffee saw its stocks surge by 12.50% following a deal with Tesco Ireland, which includes plans to open five new Esquires stores by the end of November 2025.

Other notable gainers included T&G Global, which rose by 7.84%, and Trade Window, which advanced by 6.06%. In contrast, Blis Technologies experienced a decline of 6.25%, while Rua Bioscience and My Food Bag also saw their shares slip by 5.13% and 4.35%, respectively.

In Australia, the S&P/ASX 200 rose by 0.25%, driven by mineral companies, including Nickel Industries, which gained 8.67%, and Capstone Copper, which increased by 7.59%.

Global Insights and Corporate Updates

Ferrari is facing its worst trading day ever, as the luxury carmaker’s updated full-year guidance disappointed investors. Shares plunged sharply after analysts highlighted that the targets fell short of expectations, coinciding with the company’s decision to scale back its electrification plans.

On the technology front, Google has launched subscription services for its Gemini platform, aimed at corporate workers looking to build AI agents. The Gemini Enterprise plan starts at US$30 per person per month, while the Gemini Business plan is priced at US$21 per person. Analysts suggest that larger companies are currently exploring or testing AI agents rather than deploying them on a mass scale.

Warnings regarding a potential artificial intelligence bubble have emerged from the International Monetary Fund and the Bank of England. As industry spending surges, financial institutions caution that a sharp correction could impact global stock markets if investor enthusiasm for AI wanes. IMF Managing Director Kristalina Georgieva urged investors to “buckle up,” indicating that uncertainty is likely to persist.

Today’s reports include an update from Tom Pullar-Strecker on the government’s annual accounts and a piece by Alka Prasad examining the outcomes of Māori kiwifruit growers testing the UAE-NZ trade deal’s indigenous chapter. Coverage from the Sydney Morning Herald highlights the recent surge in gold prices, comparing it to trends seen in 1979.