Global Markets Rally as Dollar Weakens, Gold Breaks Records Amid U.S. Shutdown Fears

On Monday, major global equities climbed as the U.S. dollar softened, with investors visibly bracing for the possibility of a U.S. government shutdown. Such a disruption could delay the release of critical economic data, notably the September nonfarm payrolls report. Gold surged to fresh highs, fueled by the weakening dollar and growing market jitters around the political impasse.
In Washington, President Trump planned to meet congressional leaders from both parties to negotiate extensions for federal funding. Absent a deal, government operations could halt starting Wednesday—the same day that new U.S. tariffs are scheduled to take effect on heavy trucks, patented drugs, and other goods. The convergence of fiscal deadlines and trade pressure has heightened global market attention.
If a funding lapse stretches past the Federal Reserve’s October meeting, the central bank could be deprived of key official data points. In such a scenario, analysts anticipate the Fed would lean more heavily on private indices and alternative metrics when shaping policy. The MSCI All-World Index advanced 0.16%, and Europe’s STOXX 600 gained 0.3%, marking a third consecutive month of gains. U.S. equity futures also moved higher, with S&P 500 and Nasdaq contracts rising 0.6% and 0.67%, respectively. Market participants implied a 90% probability of a Fed rate cut in October. Meanwhile, the U.S. 10-year Treasury yield dropped 4.3 basis points to 4.145%. The dollar retreated broadly, and MUFG forecast further depreciation by year-end. In energy markets, oil prices slid: Brent dropped 1.65% to $68.97 and U.S. crude fell 2% to $64.44, following resumed flows from Kurdish pipelines and expectations of an OPEC+ output increase.
The rally in global equities, despite mounting U.S. political risk, indicates that investors are betting on resilience in fundamentals and central bank support. The surge in gold underscores how safe-haven demand intensifies when policy uncertainty spikes. That said, the market’s implied 90% chance of a Fed rate cut in October appears aggressive given the possibility of data disruptions that could complicate the Fed’s decision framework.
Looking ahead, the timing and duration of any shutdown become crucial variables. If the standoff is resolved quickly, markets may largely shrug it off; if it lingers, the ripple effects could be more damaging. In particular, the Fed’s ability to interpret growth, inflation, and employment trends would be impaired—potentially delaying or altering any planned rate adjustments. Investors will be watching both diplomatic developments in Washington and incoming private economic indicators to gauge how policy and sentiment evolve.