Shares Edge Up in Asia as Dollar Weakens, US Shutdown Threatens

Sydney – Asian stock markets edged up on Monday as the dollar weakened, with investors preparing for the threat of a looming U.S. government shutdown and its possible impact on economic reports and Federal Reserve policy.

The Nikkei 225 declined 0.8%, correcting after a robust September bounce, but is still 5% higher month-to-date. South Korea's Kospi rose 1.3%, and Chinese blue chips picked up 0.7% before the Golden Week holiday. The MSCI Asia-Pacific excluding Japan index rose 0.4%, its September increase almost 4%.

On Wall Street, futures indicated modest advances, with S&P 500 futures 0.2% higher and Nasdaq futures 0.3% above, indicating optimism based on the relative strength of fourth-quarter trading. European futures also moved up, with EUROSTOXX 50, FTSE, and DAX futures each gaining about 0.3%.

The background is still controlled by uncertainty in Washington, where President Donald Trump will hold meetings with congressional leaders to avoid a shutdown. Without a spending agreement, government services might shut down from Wednesday, the same day new tariffs on heavy trucks, medicines, and other products are to come into effect.

A prolonged shutdown would hold up release of September's highly anticipated payrolls data, forcing the Federal Reserve to rely on private measures when it meets Oct. 29. Bank of America analysts said a shutdown would trim U.S. growth by roughly 0.1 percentage point each week, but warned that prolonged shutdown-induced job cutting could hurt payrolls and consumer sentiment.

In bond markets, U.S. 10-year Treasuries remained steady at 4.16% following recent selling, while the dollar index softened 0.2% to 97.95. The greenback slid 0.4% to 148.92 yen, while the euro rose to $1.1726.

Commodities had uneven movements: gold rose to a record $3,798 an ounce, while oil prices declined. Brent crude declined 0.8% to $69.73 and U.S. crude 0.7% to $65.27, following news that OPEC+ would consider another output boost next Sunday and the restart of crude shipments from Iraq's Kurdistan region to Turkey after 2½ years.

With the focus now on central banks, the Reserve Bank of Australia will look to hold rates at 3.65% on Tuesday, after three cuts already this year. Several Federal Reserve and ECB officials are due to speak this week, adding to market expectation prior to the October Fed meeting.