Kiwi gains as US govt shuts down; Wall St climbs as Fed on track to cut rates

The kiwi dollar gained as the US federal government shut down after legislators failed to find common ground in a last-minute funding plan, with President Donald Trump weighing up whether to permanently dismiss some workers during the closure.

Stocks on Wall Street shrugged off Washington’s woes, as drugmakers such as Eli Lilly & Co extended gains after Pfizer’s deal to avoid US tariffs, while softer private payrolls figures reaffirmed expectations the Federal Reserve will cut the benchmark interest rate when it reviews monetary policy later this month.

Fed governor Lisa Cook will be among those decisionmakers with the Supreme Court rejecting the US justice department’s request for an immediate decision on the president’s dismissal of her, and will hear arguments over the attempt to remove her in January.

And Exxon-Mobil’s New Zealand chain of Mobil service stations is said to be back on the block as the global oil giant lays off staff around the world.

No deal

The New Zealand dollar rose to 58.12 US cents at 7am in Auckland from 57.91 cents yesterday after another US federal government shutdown weighed on the greenback and pushed down the yield on US 10-year Treasuries 3 basis points to 4.12%. Fitch Ratings said there aren’t any immediate ramifications for the US credit rating.

US congressional leaders couldn’t agree to a last-minute deal before the deadline when funding ran out, with Democrats seeking to keep healthcare subsidies set to lapse to approve another stop-gap bill to keep the lights on.

US President Donald Trump said he might use the shutdown to cut some programmes and dismiss some staff permanently.

“After a soft tone for risk sentiment in Asia, as the US government shutdown took effect, the S&P has recovered from an initial dip on open to be little changed,” Bank of New Zealand senior interest rate strategist Stuart Ritson said in a note.

Stocks on Wall Street shrugged off the political gridlock, with an unexpected decline in private payrolls last month keeping expectations alive for the Federal Reserve to cut the federal funds rate later this month, even without the latest non-farm payrolls data.

One more time

Fed governor Lisa Cook will still be among the central bankers voting on the decision after the Supreme Court rejected the Department of Justice’s push for an immediate decision on the president’s dismissal of her, deciding to hear the case for removal in January.

Drugmakers were among those pacing gains on both sides of the Atlantic, with Eli Lilly up 8.3% in late trading on Wall Street. The S&P 500 was up 0.3% and the Nasdaq Composite rose 0.4%, while the UK’s FTSE 100 index gained 1%, Germany’s DAX 30 advanced 1% and France’s CAC 40 increased 0.9%.

Microsoft nudged higher after saying chief commercial officer Judson Althoff will take an expanded role as chief executive of commercial business, freeing up Satya Nadella to focus on the tech giant’s push into artificial intelligence.

Those gains are poised to spill over to the antipodes, with Australian futures pointing to a 0.6% gain for the S&P/ASX 200 index when trading opens across the Tasman.

No major local data are scheduled for today, while retailer Warehouse Group is due to report its annual result. In July, the owner of the Red Sheds signalled pre-tax earnings were likely to be between a loss of $5 million and a profit of $5 million, with margins squeezed in a tough trading environment.

Meanwhile, The Australian’s DataRoom column reporting Exxon-Mobil is considering selling its New Zealand assets as the oil giant clamps down on costs around the world, with plans to lay off 3% of its workforce. Exxon’s New Zealand Mobil service station chain has been rumoured to have been for sale a number of times for many years.

Reporting by Paul McBeth. Image from Jacob Creswick on Unsplash.