Markets Mixed as US Shutdown Nears Possible End – UK Borrowing Hits New High
Global markets were steady but cautious on Tuesday, as investors balanced optimism over a possible end to the US government shutdown with concerns about the UK’s growing debt pile.
Wall Street Holds Firm Amid Shutdown Speculation
US stocks traded mixed through Tuesday’s session as traders waited for clearer signals out of Washington. Hopes rose after White House economic advisor Kevin Hassett suggested the government shutdown could “likely end sometime this week.”
His remarks shifted sentiment sharply on prediction platform Polymarket, where bets on the shutdown lasting beyond 16 November dropped from 45% to 29%, while the odds of a resolution by 3 November rose to nearly 50%.
This marks the third-longest federal work stoppage in US history, and it’s beginning to weigh on market confidence. Investors are now paying close attention to upcoming Federal Reserve speeches for hints about the direction of interest rates ahead of next week’s policy meeting.
Meanwhile, Senate Republicans were due to meet President Donald Trump for lunch at the White House — another possible turning point in negotiations.
UK Borrowing Surges – Highest for September Since 2020
Across the Atlantic, fresh data from the Office for National Statistics (ONS) painted a worrying picture for Britain’s public finances. The government borrowed £20.2 billion in September — the highest September figure since 2020, when COVID-19 spending was at its peak.
That’s an increase of £1.6 billion compared with the same month last year, driven by a sharp rise in overall spending despite higher tax receipts from Chancellor Rachel Reeves’ recent tax measures.
Public sector spending climbed to £115.3 billion, up nearly £9 billion year-on-year, while total income reached £95.1 billion. Since April, total UK borrowing has already neared £100 billion, signalling the largest deficit since the pandemic’s first year.
ONS chief economist Grant Fitzner noted that higher debt interest costs and rising demands on public services have more than offset the government’s increased tax revenues.
The timing couldn’t be worse for Reeves, who is under mounting pressure ahead of the autumn budget on 26 November. Analysts expect her to announce a mix of tax rises and spending cuts worth between £20bn and £30bn in an effort to stabilise the nation’s books.
European and US Markets Edge Higher
Despite the fiscal worries, European equities pushed modestly higher.
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The FTSE 100 gained 0.3% by the close.
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Germany’s DAX added 0.5%, and France’s CAC 40 climbed 0.8%.
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The pan-European STOXX 600 rose 0.3%, showing that sentiment remains cautiously positive.
Over in the US, the Dow Jones Industrial Average advanced 0.8%, reaching an intraday all-time high and setting up for a potential record close. The S&P 500 managed a 0.1% gain, while the Nasdaq Composite slipped 0.2%, largely due to mixed performance in tech stocks after Monday’s Apple-led rally.
The British pound edged 0.1% lower against the US dollar, trading around $1.3394 as traders digested the latest UK borrowing data.
Trader’s Oracle Takeaway
Markets are showing resilience — but the tone is cautious.
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In the US, the end of the government shutdown could lift confidence and support further equity gains.
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In the UK, however, soaring borrowing and fiscal tightening risks could temper optimism heading into the November budget.
For traders, this is a reminder that macro events still drive sentiment. Keeping an eye on both Washington and Westminster will be key in the days ahead — especially with volatility likely to pick up as central banks and governments make their next big moves.
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