Oil Extends Losses, Stocks Hold Three-Day Gain: Markets Wrap

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(Bloomberg) — Oil extended its drop after slumping the most since June as OPEC said crude supplies surpassed demand sooner than anticipated.

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Global benchmark Brent fell toward $62 a barrel after losing almost 4% in the previous session, while West Texas Intermediate was near $58. Energy stocks in Australia declined. Global shares held a three-day gain that took them to within touching distance of a record high as the US House passed a bill to end the longest-ever government shutdown. The S&P 500 Index has risen for four successive days as optimism built over a resolution to the shutdown.

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A gauge of Asian shares was flat, with Japanese indexes advancing amid a weaker yen. The currency has been the focus of investors after the country’s Finance Minister Satsuki Katayama issued a fresh warning on currency movements. The yen hovered around the key threshold of 155 per dollar, inching closer to levels where authorities last intervened in markets.

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With US earnings season nearing completion, markets are shifting focus to the Federal Reserve and the outlook for potential interest-rate cuts. The absence of key indicators — such as unemployment figures and October’s consumer price index — has fueled uncertainty around monetary policy, with the White House confirming those reports are unlikely to be released due to the shutdown.

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“While the markets are pricing the end of the government shutdown, there is an even bigger mountain ahead of us, and that is the resumption of all of the economic data that we have missed,” said Michael Landsberg at Landsberg Bennett Private Wealth Management. “As the fog lifts, we will see if market positioning has been correct and it is still clear sailing or if there is a big repricing necessary.”

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A six-week clash between President Donald Trump and congressional Democrats that disrupted flights across the country and delayed food aid for millions is set to end within hours after the House passed a temporary funding bill. 

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The House voted 222 to 209 Wednesday evening to pass the interim funding, although fully restarting the federal bureaucracy after the longest US government shutdown in history could still take days.

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Trump is expected to sign the bill Wednesday night in Washington to help reopen the government.

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With the government shutdown delaying key economic data, the real challenge isn’t the short-term drag on growth — it’s the increasing difficulty for investors and the Fed to gauge the economic outlook, noted Seema Shah at Principal Asset Management. 

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“As data releases resume, the case for a Fed rate cut in December should re-emerge, reinforcing a risk-on backdrop,” she said. “This environment favors US equities, particularly Big Tech and cyclicals poised to benefit from a more accommodative Fed stance.”

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Still, Boston Fed President Susan Collins said she favored holding rates steady amid still-strong growth that could slow or stall progress on cooling inflation.