CHENNAI: Global markets are expected to remain cautious on Tuesday as investors weigh political and economic risks. In the US, trading sentiment is clouded by the growing likelihood of a government shutdown with funding set to expire at midnight.
A shutdown could delay key economic reports, including this week’s nonfarm payrolls, creating fresh uncertainty for the Federal Reserve’s policy outlook. Investors will also track the JOLTS job openings data and comments from Fed officials for signals on the strength of the labor market.
US Federal Reserve Vice Chair Philip Jefferson has already warned of weakening employment conditions, raising concerns about the economy’s resilience. Technology and growth stocks may continue to see selective interest, but defensive and rate-sensitive sectors are likely to remain volatile in the current environment.
In Europe, markets opened slightly lower, with the STOXX 600 easing as energy shares dragged on sentiment following a dip in oil prices. The looming US shutdown has also dampened risk appetite across the region.
Economic data has added to the cautious mood: German unemployment rose more than expected in September, while Italian inflation came in at 1.8 percent year-on-year, a touch above forecasts. These readings could complicate the European Central Bank’s policy stance. Meanwhile, ECB officials have called for reinforcing the euro’s role as a global anchor of stability, hinting at a longer-term policy ambition.
Overall, US markets are bracing for a volatile session dominated by fiscal uncertainty and labor data, while European equities are trading with a softer tone, pressured by sectoral weakness and global risks.