Why Wall Street Soared Despite Weak Jobs Data and Government Shutdown

Market Rally Defies Economic Headwinds

Despite another batch of disappointing jobs data and the ongoing US government shutdown, Wall Street has continued its three-day rally. The ASX looks set to follow suit, with futures trading pointing to a 0.5% gain on opening.

Key Market Updates

Market Snapshot

• ASX 200 futures: +0.5% to 8,923 points
• Australian dollar: flat at 66.10 US cents
• Wall Street: S&P500 +0.3%, Dow +0.1%, Nasdaq +0.4%
• Europe: Dax +1.0%, FTSE +1.0%, Eurostoxx +1.2%
• Spot gold: +0.2% at $US3,864/ounce
• Brent crude: -1.0% to $US65.40/barrel
• Iron ore: flat at $US103.68/tonne
• Bitcoin: +2.4% at $US117,408

Wall Street Ignores Weak Job Numbers

Another batch of weak jobs data was not enough to stop Wall Street's march higher overnight. The S&P 500 gained 0.3%, the Nasdaq rose 0.4%, and the Dow added 0.1%. This occurred despite the ADP Employment report showing a decline in private payrolls of 32,000 and a downwardly revised 3,000 fall in August.

With Friday's key public sector non-farm payrolls likely delayed due to the government shutdown, the ADP survey provides the only current insight into the US jobs market.

Notable Developments

Elon Musk's Wealth Milestone

Tesla supremo Elon Musk has become the first entrepreneur to hit the $US500 billion wealth level, according to Forbes. His wealth surge was triggered by a 3.3% rise in Tesla shares overnight.

Impact of US Government Shutdowns

Are US government shutdowns bad for equity markets? Historical data suggests otherwise:

• The S&P 500 has risen during each of the last 6 shutdowns
• The average shutdown lasts only ~8 days
• The S&P 500 has ended higher one year after a shutdown in 86% of cases
• The S&P 500 posts an average gain of +13% one year after shutdowns end

Federal Reserve Developments

In other US jobs-related news, the US Supreme Court has refused to let Donald Trump fire Fed Governor Lisa Cook, at least for now. The court deferred President Trump's application pending further legal arguments.

Sector Performance

Healthcare was the strongest sector over the session after Pfizer cut a deal with the White House to lower prescription drug prices. Europe's STOXX 600 (+1.2%) hit a record high thanks to improved sentiment around pharmaceutical stocks, while the UK's FTSE (+1.0%) also closed at a record high.

Commodity Movements

Gold powered higher, almost hitting $3,900/ounce at one stage, while silver continued its ballistic run around record levels. Oil slipped to a four-month low with Brent crude down 1% to $65.38/barrel on higher-than-expected US inventories.

Australian Economic Indicators

The ABS has several data releases scheduled, including the international trade balance (expected surplus of around $5 billion) and the monthly Household Spending Indicator. The RBA will also release its quarterly Financial Stability Review statement.

Disclaimer: This information is not intended as investment advice.