Market opening snapshot
Traders push stocks higher as rate cut odds surge
Global markets opened on a positive note after fresh bets that the Federal Reserve will ease policy later in the year. All three major U.S. equity indexes finished higher on the last trading day, and futures were firmer ahead of the next session. Short-dated Treasury yields fell to two-week lows, the dollar weakened and crude oil slid to its lowest level in four months. Interest rate markets now put a high probability on additional Fed easing, with traders pricing in a 95 percent chance of 50 basis points of more cuts by year end. That repricing is driving a risk-on tone that reaches across assets and regions.
Data and policy backdrop
Employment holes and a government shutdown make the jobs picture patchy
Markets have had to adjust to an unusual information gap on U.S. employment this week. The government shutdown is likely to delay the Bureau of Labor Statistics nonfarm payrolls release and the weekly jobless claims report. In that vacuum, private indicators and company data gained outsized influence. ADP reported a surprising fall in private payrolls for September of 32,000 workers, with August revised down. Traders interpreted the softer numbers as justification for steeper Fed easing expectations, and that helped lift equities even in the absence of official data.
With less reliable government statistics in the short term, attention will turn to other labor market slices. Challenger’s layoff figures will be more closely watched than usual, and the BLS Job Openings and Labor Turnover Survey shows hiring cooled in August. The Conference Board’s consumer confidence reading also pointed to a reduced gap between those saying jobs are plentiful and those saying jobs are hard to get, narrowing to a four and a half year low. Together these pieces suggest the labor market is loosening and that central bank policy may be required to respond.
Sector rotation and corporate catalysts
Healthcare pops, chips advance and one-off deals steer flows
Not all stocks moved in the same direction. Healthcare led U.S. sector gains after a high profile pharmaceutical-deal related announcement drove investor interest in the group. Large pharma names showed strong catch-up performance after lagging the technology and AI trade earlier this year. Semiconductor shares extended gains following renewed optimism on AI-related demand for memory chips. In Asia, the Kospi rallied nearly 3 percent after Samsung and SK Hynix signed letters to supply memory chips for OpenAI data centers, while Japan’s Nikkei rose about 1 percent on the same chip-driven momentum.
Activity under the surface also produced headlines. Utilities outperformed when AES surged on a report of a potential $38 billion takeover interest from Global Infrastructure Partners. Materials lagged overall but selected lithium producers rallied after the U.S. Department of Energy took equity stakes in Lithium Americas and its joint venture with GM. These idiosyncratic moves can have outsized effects on sector performance and local market indices on any given day.
Global context: reserves, currency moves and regional markets
Swiss National Bank interventions and euro zone rallies mark a notable dynamic
Central bank behavior offers a striking backdrop to markets. The Swiss National Bank returned to active foreign exchange intervention in the second quarter to blunt a strong franc and the risk of deflation. The SNB’s quarterly balance sheet showed purchases of 5.06 billion Swiss francs of foreign currency in April through June, the largest quarterly intervention in more than three years, and most of the intervention appears to have been to buy euros. That approach is notable because reserve managers have typically shown a preference for dollar assets. For markets, the choice by the SNB to add euro exposure helps explain some of the strength in euro zone assets and eases franc appreciation pressure for now.
Euro zone stock indexes reached fresh record highs in dollar terms after a combination of the pharma rally and Germany’s fiscal boost supported sentiment. China’s Golden Week holiday reduced regional liquidity and attention, which amplified the effect of tech-related news from Korea and Japan. Meanwhile, broader geopolitical and policy stories continue to influence flows. The United States froze $26 billion destined for Democratic-leaning states as part of the current shutdown actions, and the European Union is debating how to curb energy imports from Russia, with closing of niche fuel loopholes presented as an easier option to limit flows.
What traders should watch today
Layoff numbers, factory orders and a busy roster of central bank voices
Data and speeches will guide trading decisions. The September layoffs report from Challenger arrives early and could serve as a substitute labor gauge while the official payrolls release is delayed. Factory goods orders for August will be released later in the morning and may help refine growth expectations. A number of central bank officials are due to speak, including the Dallas Fed president, and European officials including the ECB vice president and several national central bank chiefs will present views that markets will parse for policy signals. With the employment calendar disrupted, these alternative data points and public comments will carry more weight than on a typical session.
Investment implications and trading posture
Risk assets are favored but caution is warranted given data gaps
Investors have leaned into the view that the Fed will ease and that lower short-term yields will support equity valuations. That posture favors cyclical and interest rate sensitive sectors along with growth-oriented themes tied to AI and semiconductors. At the same time, the pause in routine government statistics increases uncertainty. Traders should be prepared for greater sensitivity to private data releases and corporate headlines. Safe haven assets such as gold are trading near record highs, reflecting a dual impulse of policy easing expectations and geopolitical caution. Bitcoin has also benefited from the risk-on backdrop and sits at its highest in nearly two months.
Today’s session will likely be shaped by how markets interpret the ADP print, Challenger layoffs and factory orders against the ongoing shutdown and the SNB’s reserve activity that continues to ripple through currency and equity markets. Risk taking has been rewarded in the immediate term, but the absence of the usual payroll reference point increases the need for careful position sizing and attention to headline risk.
Expect heightened volatility around data releases and central bank commentary, and monitor sector leadership for clues about where traders expect growth and policy to head next.
