European stocks showed mixed performance on Wednesday as investors weighed the potential effects of the U.S. government shutdown ahead of important eurozone inflation data.
By 07:40 GMT, Germany’s DAX index had fallen 0.4%, France’s CAC 40 slipped 0.2%, while the U.K.’s FTSE 100 gained 0.4%.
U.S. Government Shutdown Moves Forward
The U.S. federal government largely shut down Wednesday after a last-minute spending bill supported by Republicans failed to pass the Senate, facing continued opposition from Democrats. This marks the 15th U.S. shutdown since 1981. While most previous shutdowns were resolved relatively quickly, the longest occurred during President Donald Trump’s first term. Political divisions are arguably deeper now.
Trump has threatened additional federal layoffs, with over 150,000 employees expected to leave payrolls this week following buyouts, marking the largest federal workforce exit in 80 years. The shutdown could weigh on growth in the world’s largest economy, a key driver of global growth.
Eurozone Inflation in Focus
In Europe, attention is turning to September’s eurozone inflation data, expected to show annual inflation rising to 2.2% from 2.0%. Upside risks are noted after German inflation accelerated more than expected in September, ending the recent disinflationary trend. As Europe’s largest economy, Germany’s inflation data will heavily influence the overall eurozone figure.
The European Central Bank kept interest rates unchanged last month, and stronger inflation could suggest policymakers see the easing cycle as concluded, at least temporarily.
Corporate News
Novartis (NYSE:NVO) shares rose after the U.S. FDA approved its oral treatment for patients with a chronic inflammatory skin condition. BMW (TG: BMW) slipped slightly following a U.S. recall of over 145,000 vehicles due to potential starter motor overheating. Greggs (LSE: GRG) shares climbed after reporting solid third-quarter sales and maintaining its full-year guidance.
Oil and Gold Update
Oil prices stabilized after two days of losses as investors considered OPEC+ plans for a larger November output hike and the impact of the U.S. shutdown on demand. Brent futures rose 0.6% to $66.43/barrel, while WTI climbed 0.6% to $62.76/barrel. Earlier in the week, both benchmarks fell sharply, with Brent and WTI dropping more than 3% on Monday and another 1.5% on Tuesday. OPEC+ could boost output by up to 500,000 barrels per day next month, triple the October increase, Reuters reported.
Spot gold reached a record $2,875.53/oz earlier in the session, while December gold futures peaked at $3,903.45/oz, as the U.S. shutdown drove demand for safe-haven assets.
This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.
Leave a Reply