Markets Brace for Potential U.S. Government Shutdown Amid Uncertainty

In a tense start to the week for global markets, investors are warily eyeing the impending potential U.S. government shutdown, as President Trump prepares to meet with Democratic and Republican Congressional leaders. With treasury yields declining and the dollar weakening, most Asian stocks registered minor gains.

Analysts from Bank of America have estimated that a government closure could trim 0.1% off the GDP for each week it remains closed. Historically, such shutdowns have had minimal effect on financial markets since eventual resolutions are generally expected. The timing, however, disrupts the anticipated release of September payrolls data and brings uncertainty ahead of the Federal Reserve's meeting on October 29, even as markets price in a possible rate cut.

Compounding concerns, tariffs on items like big trucks and patented drugs are set to take effect, although implementation remains unclear. Additionally, the Trump administration is rumored to be considering levies on foreign electronic devices based on chip usage, causing further anxiety. Investors hope no significant developments spoil what is typically a strong fourth quarter for equities, with historical gains reported for the Nasdaq index.

(With inputs from agencies.)