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⚠️ Shutdown becomes the norm: stocks prepare for a fall⠀
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American lawmakers have not yet been able to come to an agreement on preventing another crisis. Part of the funding programs will remain without funds as early as Friday, which will negatively affect the market of risky assets.⠀
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Earlier, in January, both chambers of Congress reached an agreement on funding the government in 2024 (the level of spending was to amount to $1.66 trillion), but failed to pass the relevant bill. Negotiations in Congress did not lead to the elimination of differences between Republicans and Democrats. In addition to the problems with the shutdown, the issues of aid to Ukraine, Israel, and Taiwan remain unresolved.⠀
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Even a partial shutdown could disrupt federal food aid programs. Earlier, Biden delayed the shutdown of several departments until March 1, and the rest of the government, including the Defense Department, until the 8th. Roughly 20% of U.S. federal government structures will close on March 2, with the deadline for the remaining 80% coming just a week later.⠀
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Stocks usually ignore intergovernmental strife in the medium term, but the day the shutdown officially begins always brings losses for investors, especially when accompanied by the release of major statistics. Next Friday, we remind you, is announced the publication of a package of statistics from ISM.⠀
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In 8 out of 14 past shutdowns since 1981, stocks suffered losses (S&P 500 declined by 2- 2.5%) on the day the crisis started. And while momentum rebounded a few days later, the losses could be severe for some risk assets.⠀
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At this point, lawmakers are clearly not ready for a new truce, so markets are preparing for a short-term shock.⠀
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Profits to y’all!