October 2, 2025 – The first U.S. federal government shutdown in nearly seven years, combined with a surprise contraction in ADP employment data (down 32,000), sparked a surge in risk-off sentiment. Gold broke decisively above the $3,900 mark to a fresh record high, while U.S. equities staged a V-shaped rebound led by pharmaceuticals and semiconductors. Treasury yields fell to a two-week low, and Bitcoin jumped nearly 2%. The central theme remains “policy uncertainty reinforcing rate-cut expectations,” with the probability of an October Fed rate cut rising to 96%.
Equities: U.S. stocks rebound, led by healthcare and lithium miners
Market recap: All three major indices opened lower, with the Dow down 0.22% and the Nasdaq down 0.57% at the open. Gains in pharmaceuticals (Pfizer +6%, Merck +6%) and chip stocks (Nvidia turning higher) fueled the rebound, with the S&P healthcare sector up nearly 2%.
Lithium Americas surged more than 20% after U.S. Department of Energy took an equity stake, while Nike gained 5% on stronger-than-expected earnings.
Government shutdown impact: Key economic data such as nonfarm payrolls may be delayed, complicating Fed decision-making, but markets are betting on policy easing.
Structural opportunities: Pharma stocks benefited from a tariff exemption deal between the Trump administration and Pfizer, while lithium miners gained from policy backing, highlighting the strong outlook for the new energy supply chain.
Precious Metals: Gold hits fresh record highs on safe-haven demand
Spot gold rose 0.9% to $3,895/oz, while New York futures broke $3,930, posting a third consecutive record high.
Drivers: The government shutdown stoked political uncertainty, while the negative ADP jobs print (down 32,000) raised concerns over slowing growth.
Rate-cut expectations: CME FedWatch now shows a 99% probability of an October rate cut, with lower real rate expectations supporting gold.
FX & Bonds: Dollar steady, Treasury yields tumble
FX: The dollar index edged up to 97.84, while USD/JPY was flat at 148.1.
Bonds: The 10-year Treasury yield fell to 4.09% (a two-week low), while the 2-year yield tested 3.54%.
Logic: Weak ADP data triggered a bond-buying rush, though eurozone economic weakness capped dollar downside.
Commodities: Oil stabilizes, lithium in focus
Energy: Brent crude steadied around $66 after two days of losses. OPEC+ supply increase expectations clashed with prospects of declining U.S. inventories.
Key sector: Lithium prices jumped as U.S. Department of Energy’s investment underscored the strategic value of the new energy supply chain.
Crypto: Bitcoin tops $116K
Bitcoin rose 1.8% to $116,182, while Ethereum climbed above $4,300 (+3%).
Drivers: With volatility rising in risk assets, cryptocurrencies — as high-beta assets — gained from liquidity expectations, though regulatory risks linger.
Today’s focus
U.S. Initial Jobless Claims (20:30): A higher reading than the prior 218k could further reinforce rate-cut expectations.
