The Davy Digest - 6th October 2025

US equities hit new highs last week as investors were hopeful that a US government shutdown would have a limited impact on the economy. The shutdown began after attempts to secure a temporary spending bill failed. On the data front, US job openings increased marginally in August while hiring declined. The September nonfarm payrolls report was not released on Friday due to the government shutdown. The Conference Board’s Consumer Confidence index edged lower in September to 94.2, lower than the 96.0 estimate. ADP private payrolls data was released on Wednesday, showing private companies lost 32k jobs during the month, the biggest fall since March 2023. Over in the Eurozone, inflation moved up to 2.2% in September, driven higher by price rises in services and food. In the UK, mortgage approvals declined in August while consumer credit remained flat. The final estimate for UK Q2 GDP showed that the UK economy grew by 0.3% in Q2, down from 0.7% in Q1. Finally, in Japan, industrial output declined 1.2% in August, worse than forecast, while retail sales fell 1.1%.

Last week's highlights

	US Job Openings (30/09) - Increased marginally while hiring declined. Conference Board Consumer Confidence (30/09) – Edged lower in September to 94.2 vs 96.0 estimate.  ADP Private Payrolls (03/10) – Declined 32k, biggest fall since Mar 2023.
	Eurozone Inflation (01/10) – Moved up to 2.2% in September, driven by price rises in services and food.
	Consumer Credit (29/09) -  UK mortgage approvals declined in August while consumer credit remained flat.  Q2 GDP Final Estimate (30/09) - UK GDP growth slowed to 0.3% in Q2 from 0.7% in Q1.
	Japan Retail Sales & Industrial Output (30/09) -  Industrial output declined 1.2% in August, worse than forecast, while retail sales fell 1.1%.

Looking ahead to this week, investors will be hoping for a quick resolution to the US government shutdown.  The minutes of the most recent Federal Reserve meeting are due out on Wednesday. Nonfarm payrolls, due to be released last Friday, will be released after the government shutdown is resolved. In Europe, investors will receive data on German factory orders and the German balance of trade. In the UK, the S&P Global construction PMI is out on Monday while the Halifax house price Index is out on Tuesday. Elsewhere, the Reserve Bank of New Zealand will meet on Tuesday and are expected to lower interest rates. In Brazil, inflation figures for September will be released on Friday.

What's on the radar

	10 Year Note Auction (08/10) FOMC Meeting Minutes (08/10) Initial Jobless Claims (09/10)
	German Factory Orders (07/10) Germany Balance of Trade (09/10) Eurogroup Meetings (09/10)
	S&P Global Construction PMI (06/10) UK Halifax House Price Index (07/10)
	Japan Household Spending (06/10) Reserve Bank of New Zealand Meeting (07/10) Brazil CPI (09/10)

Chart of the moment - Make Amercia govern again 

Source: US House of Representatives, Bloomberg.

Note: Chart shows % price return indexed to zero at start of government shutdowns. Chart includes all shutdowns that lasted 5 days or more since 1980.

• The US government shut down last week as the Republicans and Democrats failed to agree to a funding deal.
• Ten of the past twenty shutdowns have been short lived. (1-3 days)
• The shutdown in 2018 lasted 35 days. The S&P 500 sold off in advance of the 2018 shutdown, but the selloff was caused by several factors - concerns about slowing growth, tightening monetary policy, high valuations and geopolitical uncertainty.
• Markets tend to ignore brief government shutdowns, as they rarely affect corporate earnings, more prolonged shutdowns can impact investor confidence.

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