US Gov't Shutdown Sparks Mixed Market Reactions: Gold Soars, Bonds Steady, Pharma Boosted
The US government shutdown has sparked varied reactions across global markets. While some sectors remain largely unaffected, others have shown significant movement.
Gold investors, seeking refuge from uncertainty, pushed the precious metal to a new record high of $3,895 per troy ounce. Meanwhile, the bond markets showed little reaction, with the ten-year Bund yield steady at 2.71% and US Treasury bonds experiencing only slight yield movements.
The US pharmaceutical industry saw a boost following an agreement between Pfizer and the US government. Pfizer agreed to lower prices for Medicaid in exchange for tariff concessions, leading to a 3% rise in the European health sector index. This deal, part of President Trump's efforts to reduce drug prices, is expected to be followed by other pharmaceutical companies. Despite the US shutdown, European stock markets gained, with the Euro Stoxx up 1% and the German Dax index up 1% to 24,114 points.
Historical patterns suggest that a shutdown alone may not disrupt the upward trend on the stock market. However, DZ Bank warns that the shutdown could pose a 'possible stress test' due to uncertainty about economic data and political dysfunction.
The US government shutdown has had mixed impacts on global markets. While gold prices soared and European stocks gained, bond markets remained largely unaffected. The Pfizer-Medicaid deal has injected optimism into the pharmaceutical sector, with further agreements expected. However, the long-term effects of the shutdown on markets remain uncertain.
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