U.S. stocks opened in mixed fashion on Wednesday, as investors gauged a surge in gold prices and attempted to parse out the path ahead for U.S. interest rates despite a lack of fresh economic data during an ongoing federal government shutdown.
By 09:43 ET (13:43 GMT), the benchmark S&P 500 had inched up by 6 points, or 0.1%, and the tech-heavy Nasdaq Composite had climbed by 82 points, or 0.3%. The blue-chip Dow Jones Industrial Average ticked down by 82 points, or 0.2%.
With the prolonged shutdown leading to the delay of several key economic indicators from the government, traders have had to turn to alternative data sources to check in on the health of the American economy. These measures dented sentiment in the previous session, especially a New York Federal Reserve survey displaying a deterioration in future expectations and rising projections for inflation.
Beyond the U.S., political and economic uncertainty remained. A central bank decision in New Zealand was surprisingly dovish, although another in Thailand was unexpectedly hawkish.
France’s political turmoil also rumbled on, but domestic stocks rose as the odds of a snap election in Europe’s second-largest economy faded. At the same time, industrial production for August in regional powerhouse Germany missed expectations.
Gold rises above $4,000 an ounce
Against such an unclear backdrop, gold prices have soared above $4,000 per ounce for the first time, as market participants like private investors and central banks seek the relative safety of the yellow metal.
Bullion has surged by over 50% so far this year, posting a series of fresh all-time peaks along the way. It is now on track to jump to its best year since 1979.
Analysts have noted that the U.S. government shutdown, combined with a weakening of other perceived havens such as the dollar and U.S. government bonds due to anticipated Fed interest rate cuts and concerns over America’s fiscal profile, have burnished gold.
The Japanese yen, another traditional haven, took a knock as well following the election of a new dovish leader of the ruling Liberal Democratic Party.
Meanwhile, many exchange-traded funds have been expanding their holdings of gold as anticipation of Fed rate reductions intensifies, analysts at ING said in a note. Some central banks are buying the precious metal as well, with the People’s Bank of China in particular extending its gold buying streak in September for an eleventh straight month despite record high prices.
FOMC minutes in focus
Attention is now set to turn to the publication of minutes on Wednesday from the Fed’s latest policy meeting in September.
At the gathering, Fed members voted to slash rates by a quarter of a percentage point, restarting a cycle of policy easing that had been put on hold since December. Officials broadly predicted that further rate cuts may be coming at the central bank’s final two meetings of the year, one later this month from October 28-29 and another in December.
Underpinning these projections was a perceived desire to prioritize bolstering a recently slowing U.S. labor market over stubborn inflation. In theory, rate reductions can promote hiring and investment, albeit at the risk of driving up prices.
A few Fed officials are scheduled to speak, although the lack of new economic data means that their comments are not likely to fundamentally alter rate path bets, analysts at Vital Knowledge said.
In individual stocks, Nvidia shares rose after Bloomberg News reported that the AI-darling is being tapped by Elon Musk’s xAI to help lift the startup’s current funding round to $20 billion.
Elsewhere, shares of technology hardware group Penguin Solutions sank sharply on fourth-quarter net sales which fell short of estimates.
Source :
https://www.investing.com/news/stock-market-news/us-futures-rise-with-gold-spike-fomc-minutes-in-focus-4276761
