·Global selloff underway as traders sour on U.S.
government shutdown and doubts the Fed growBy Jim EdwardsBy Jim EdwardsExecutive Editor, Global NewsJim EdwardsExecutive Editor, Global NewsJim Edwards is the executive editor for global news at Fortune.
He was previously the editor-in-chief of Insider's news division and the founding editor of Insider UK. His investigative journalism has changed the law in two U.S. federal districts and two states.
The U.S. Supreme Court cited his work on the death penalty in the concurrence to Baze v. Rees, the ruling on whether lethal injection is cruel or unusual.
He also won the Neal award for an investigation of bribes and kickbacks on Madison Avenue.SEE FULL BIO On the floor of the New York Stock Exchange, enthusiasm has been curbed.Photo by TIMOTHY A.
CLARY / AFPStocks sold off in Asia this morning and Europe ticked down as well. U.S. futures were marginally down before the bell ing yesterday’s 0.28% decline in the S&P 500.
Analysts pointed to the U.S. government shutdown, where a resolution is nowhere in sight. And some no longer see two more rate cuts from the Fed coming this year.
It’s not chaos but it’s not good: The S&P 500 lost 0.28% yesterday and futures this morning are flat—suggesting that traders are unenthusiastic bidding the market higher.
Meanwhile, lost ground right across Asia. China’s CSI 300 closed down nearly 2% after the government there announced strict new export controls on rare earth materials.
The controls will hobble both the U.S. companies that rely on them for semiconductor chips and the Chinese companies that supply them.
The Nikkei 225 was down after Japan’s government lost a coalition partner. In Europe, the Stoxx 600 and the U.K.’s FTSE 100 were both marginally down in early trading.
The backdrop is a negative vibe shift on Wall Street. The government shutdown now looks it will be long, rather than short.
Polymarket odds show more than 90% of traders betting on October 15 or later for an end to the shutdown.
“The mood music hasn’t been helped by the government shutdown, which is now entering its 10th day.
And the fear is that the longer it lasts, the worse the economic impact will be, as increasing numbers of workers miss paychecks from here,” Jim Reid and the team at Deutsche Bank said in a note this morning.
The shutdown will marginally increase unemployment, according to Pantheon Macroeconomics: “September’s payroll report ly will be released three working days after the shutdown ends.
October payrolls will be unaffected by the shutdown, but the unemployment rate will be lifted by 0.2pp,” Samuel Tombs and Or Allen said in a note to clients.
The negativity is compounded by the release of minutes from the U.S.
Federal Reserve’s interest-rate setting Federal Open Market Committee, which show that Fed members may not be as keen on dering two more rate cuts this year as Wall Street had assumed.
(Stock traders interest rate cuts because cheaper money generally inflates stock prices.) “Fed’s Barr said ‘the FOMC should be cautious adjusting policy so that we can gather further data […] and better assess the balance of risks’ and suggested that the FOMC should be sceptical calls to look through tariff induced inflation.
Meanwhile, Fed’s Daly struck a different tone saying that the labour market is ‘worrisome’ and calls for ‘risk management’ amidst ‘modestly restrictive’ monetary policy,” RBC’s Peter Schaffrik noted this morning.
Macquarie agreed: “Based on the FOMC Minutes, Fed officials were not very dovish in midSeptember.
And since then, non-official inflation indicators don’t point to less inflation, but rather to more inflation.
With stocks rallying, gold spiking, and corporate credit spreads remaining tight, the … implied bability of a Fed cut on October 29 – now at 96% – seems to be too high.
The right ballpark should be a 50-75% bability,” Thierry Wizman and Gareth Berry told clients.
Looking forward, Pantheon noted that when the FOMC members are rotated next year, the new incoming members may be more hawkish on rates than the ones they replace.
Here’s a snapshot of the ahead of the opening bell in New York this morning: S&P 500 futures were down marginally this morning. The index closed down 0.28% in its last session.
STOXX Europe 600 was down 0.2% in early trading. The U.K.’s FTSE 100 was down 0.14% in early trading. Japan’s Nikkei 225 was down 1.01%. China’s CSI 300 was down 1.97%.
The South Korea KOSPI was up 1.73%. India’s Nifty 50 was up 0.51% before the end of the session. Bitcoin held at $121.4K.Fortune Global Forum returns Oct. 26–27, 2025 in Riyadh.
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