Market outlook: Government shutdown looms in the US

Prices on European stock markets are rising. Will the DAX manage to break free from its technical chart constraints, or will US politics create new headwinds? The stock markets are facing an exciting week of trading.
 

September 29, 2025. FRANKFURT (Frankfurt Stock Exchange). The last week of the current month begins with rising prices for the DAX. After a gain of 0.4 percent in the previous week and a closing level of 23,739 points, the leading German index is trading around 100 points higher this morning. Although the major US indices lost slightly in value last week, the losses were contained on Friday.

Positive chart analysis and an anxious eye on the US

From a technical perspective, Marcel Mußler of Mußler Briefen tends to be confident about the German stock market. “The current weekly candle conveys a spirit of optimism and a fighting mood on the DAX,” writes the chart technician in his market outlook. However, the index still needs a ‘breakthrough’ in the form of a rise above a resistance zone that currently ranges from 23,854 to around 23,970 points. Until then, “it is and will remain difficult.”

The impending government shutdown in the US on October 1 could weigh on the market this week. “Polymarket currently puts the probability of a US government shutdown in 2025 at 77 percent,” according to Deutsche Bank. There are still no signs of a breakthrough between Republicans and Democrats on this issue. “And the Republicans need at least some support from the Democrats, as 60 votes are required in the Senate to avoid obstruction.”

"If the US Congress does not reach an agreement at short notice, the US government will run out of money on Wednesday. Many agencies that do not perform critical functions would then have to close. In addition, the publication of economic data could be delayed,“ warn Commerzbank analysts. This should lead to ”higher volatility in the stock markets." US President Donald Trump has already announced mass layoffs in the public sector in the event of a failure to reach an agreement.

There are new tariffs once again

However, the possible shutdown is not currently perceived as a major threat on the stock markets, according to Helaba strategists. “There is clearly a prevailing sense of confidence that Republicans and Democrats will reach a last-minute agreement or at least find a temporary solution.” Even the announcement of new US tariffs has not been able to dampen the mood on the stock markets in the long term. “In a world of Teflon markets, concerns about trade restrictions are no longer even relevant,” write the strategists at NordLB.

Their colleagues at Commerzbank see things somewhat differently. The announced tariffs of 100 percent on pharmaceuticals, among other things, would hit the German pharmaceutical industry particularly hard, as almost 25 percent of total German pharmaceutical exports go to the US. “This will primarily affect companies that do not have or are not planning to have production facilities in the US.”

New figures on the US labor market

Otherwise, the focus this week will once again be on some important economic data (see below). According to NordLB, the financial markets will be focusing primarily on the Fed's monetary policy plans. Particular attention should be paid to the latest figures on the employment situation in the US. However, analysts are not particularly concerned here either. “The data is unlikely to be encouraging, which would fit in well with the scenario of further cautious interest rate cuts by the FOMC.”

Important economic and business events of the week

Monday, September 29

11:00 a.m. Eurozone: Economic Sentiment: According to Deka economists, leading indicators in the eurozone continue to point to only a sluggish economic recovery. This also applies to the European Commission's Economic Sentiment Indicator for September. However, there are clear regional differences. While the sun is shining brightly in Spain, Germany remains autumnal, cool, and rainy. France and Italy fall somewhere in between.

Tuesday, September 30

3:45 a.m.: China: Manufacturing Purchasing Managers' Index. According to Deka, industry has been the most important pillar of the Chinese economy so far this year. However, momentum has slowed somewhat recently. The official Purchasing Managers' Index for the manufacturing sector is therefore likely to have remained just below the 50-point mark in September.

2:00 p.m.: Germany: Consumer prices. The consensus forecast is for an annual rate of 2.3 percent. Helaba expects 2.4 percent.

4:00 p.m.: USA: Consumer confidence. After a value of 97.4 in the previous month, an average decline to 95.8 is expected for September.

Wednesday, October 1

11:00 a.m. Eurozone: Consumer prices. According to Deka experts, inflation is likely to have risen to 2.3 percent in September. Analysts point to a base effect, as the price declines for energy goods fall outside the twelve-month period under review. The core inflation rate is expected to remain unchanged at 2.3 percent. “While the appreciation of the euro is dampening inflation in industrial goods, price increases in services are likely to have accelerated somewhat again, led by the tourism and transportation sectors,” the preview states.

4:00 p.m. USA: ISM Manufacturing Index. Deutsche Bank forecasts a value of 49.1 for the manufacturing sector, following 48.7 in August. 

Thursday, October 2

11:00 a.m. Eurozone: Unemployment rate. Deka strategists describe the situation on the eurozone labor market as “very good.” They say there is full employment, which will also be the case in August. According to economists, the unemployment rate remains at an all-time low. However, unemployment rates within the eurozone are very heterogeneous.

Friday, October 3

German Unity Day: Trading in Germany. Xetra and Frankfurt are open as usual. Only trading in shares, ETPs, and ETFs ends at 8:00 p.m. in Frankfurt. Structured products are traded until 10:00 p.m.

2:30 p.m. USA: Labor market report. Deutsche Bank's US economists expect employment figures to rise by 75,000, compared with 22,000 in August. They also expect the unemployment rate to fall from 4.3 percent to 4.2 percent and the growth rate of hourly wages to remain at +0.3 percent.

USA: ISM Services Index. Deutsche Bank analysts expect the services index to come in at 50.9 (52.0).