US government shutdown looks to cancel Friday’s jobs report

Chinese markets continued to show resilience today, with improved PMI surveys offering a glimmer of hope for the broader economy. The latest manufacturing PMI climbed to a six-month high of 49.8, edging closer to the key 50 threshold after a six-month period of contraction. The data, coupled with renewed optimism around Chinese tech stocks, helped the Hang Seng rise 0.9%, with traders increasingly viewing Chinese AI names as a means to diversify from the Mag7 names. Market sentiment is also being supported by expectations of further government stimulus, while the trade breakdown with the United States has been less harsh than many had anticipated.

Oil prices are under pressure once again as geopolitical risk premia begin to unwind. The announcement of a 20-point Gaza peace plan laid out by Donald Trump has raised some hope of a potential end to the crisis, weighing on crude. The proposed deal includes disarmament of Hamas and redevelopment of Gaza under a two-state framework. While scepticism remains high over the feasibility of rebuilding Gaza and managing the displacement of people, any progress towards agreement would mark an important step toward de-escalation. With OPEC+ set to raise the production quota for November this week, China’s manufacturing PMI still showing contraction, and the potential for regional tensions to ease, it is easy to see why US crude has dropped to a one-week low of $62.30 this morning.

US markets are grappling with the risk of a government shutdown after last-minute negotiations between Trump and congressional leaders failed to yield a breakthrough. History offers some perspective: Trump oversaw a 34-day shutdown in 2018, which markets ultimately absorbed. Typically, short-term volatility is seen as a buying opportunity by investors, and a similar pattern may emerge again. However, the situation has notable implications for data transparency. The Bureau of Labor Statistics has confirmed that in the event of a shutdown, key economic releases (including Friday’s non-farm payrolls) will be suspended. For markets, this means trading in the near term without one of the most important indicators of US economic health.