A look at the day ahead in European and global markets

By Kevin Buckland, Asia Markets Correspondent

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Investors already knew the U.S. labour market needed support, but there is something particularly ominous in the miserable ADP employment report delivered to the market just as the government shutdown ended the flow of official data.

The ADP reported a 32,000 drop in payrolls against economist expectations of a 50,000 rise for September. And the 54,000 advance for August was revised to a small decline.

German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, October 1, 2025. REUTERS/staff

For now, traders are embracing a "bad news is good news" narrative, adding to bets for quarter-point rate cuts at each of the Federal Reserve's remaining policy meetings this year.

High-growth chip-sector shares were clear winners on Wall Street, and that flowed over to Asia, buoying bourses from Tokyo to Taipei and Hong Kong to Seoul. European futures are pointing firmly higher as well.

Short-dated Treasury yields dipped further in Tokyo, touching a fresh two-week trough. And that kept the dollar pinned near a one-week low versus a basket of its major rivals.

Gold is taking a well-deserved rest after rocketing to the cusp of $3,900 for the first time ever overnight, but hasn't strayed far, last changing hands around $3,866.

How long the U.S. shutdown lasts could be key, analysts say. Currently, there's still several weeks before the Fed's next rate decision on October 29, so there's plenty of cushion to get the employment and other data back on-line.

Unfortunately, the deep partisan divisions that led to the shutdown point to a protracted battle, and could leave the Fed to a large extent flying blind.

Barring some miracle, there will be no release of crucial monthly payrolls data on Friday, and the weekly Thursday jobless claims figures will be an even earlier victim of the Labor Department going dark. That means private Challenger layoffs data later today will garner much more attention than usual.

Fedspeak won't be affected, with Dallas Fed chief Lorie Logan due to make an appearance.

In Europe, ECB Vice-President Luis De Guindos and other policymakers, including ECB board member Patrick Montagner, Irish central bank head Gabriel Makhlouf and Riksbank Governor Erik Thedéen, are due to address various forums.

Graphics are produced by Reuters.

Graphics are produced by Reuters.

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