NEW YORK / LONDON (IT BOLTWISE) – After the euphoria over the possible end of the longest government shutdown in US history, disillusionment is setting in on Wall Street. Investors are cautious about an upcoming flood of economic data that could provide new insights into economic developments.
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Wall Street remained cautious on Tuesday as euphoria over the impending end to the longest government shutdown in U.S. history faded. The US Senate has set the stage for an end to the spending freeze, and the package now heads to the House of Representatives for a final vote. But investors are cautious as a flood of previously unreleased economic data is expected that could provide unpleasant insights into economic developments.
The Dow Jones Index is trading 0.7 percent higher at 47,714 points around midday (New York time), while the S&P 500 is hardly changed and the Nasdaq Composite is down 0.6 percent. Market strategist Jim Reid from Deutsche Bank points out that as the shutdown ends, there will be a number of US data releases that could influence markets in the coming weeks. In particular, the September labor market report could be released quickly, as the original release was scheduled just days after the government shutdown began.
Uncertainty about the US Federal Reserve’s future interest rate developments is contributing to investor reluctance. The central bank will decide on the future key interest rate level on December 9th and 10th, and the data situation could become complex. The dollar index is down 0.3 percent, and analysts like Commerzbank’s Thu Lan Nguyen see a possible end to the shutdown as a negative for the greenback if delayed data suggests another rate cut.
Gold prices are rising to their highest level in almost three weeks amid speculation about further US interest rate cuts. MUFG analyst Soojin Kim says optimism for further rate cuts has grown following a bipartisan agreement to end the government shutdown. The price of oil is also rising sharply, supported by the weakening dollar and geopolitical developments, such as India’s reduction of Russian oil imports and US pressure on Russian oil companies.
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