Hundreds of thousands of civil servants have gone on forced leave, and only the most important departments will be working. How did the markets react to the situation?

Stocks fall, gold sets records

Futures on American stocks went down. Dow Jones and S&P 500 futures declined 0.4%, while Nasdaq 100 contracts fell 0.5%.

In the past, stocks have quietly endured stoppages and have remained virtually unchanged on average. In the near term, there is a risk of volatility for defense contractors and consulting firms whose revenues depend on the state, as well as for airlines, which may lose due to business and leisure trips of federal employees, Bloomberg reports.

According to Matt Gertken of BCA Research, a prolonged work stoppage will create problems for sectors such as industry and the financial sector, which are closely related to the state of the economy. In addition, it increases the likelihood of consequences spreading.

"The length of the work stoppage is crucial," Citigroup said. "Stocks tend to weaken with longer business suspensions, while rates tend to rise."

Meanwhile, gold prices reached an all-time high during Asian trading. Spot gold reached an all-time high of $2,875.53 per ounce, while gold futures for December delivery peaked at $3,903.45 per ounce.

The dollar index dropped 0.17% and reached a weekly low of 97.64.

What the shutdown looks like

A deadlock situation can lead to unpredictable economic consequences. The main focus of the market is now on the government's economic data.

The Bureau of Labor Statistics (BLS) is one of the government's main data collectors and, according to its contingency plan, will "completely cease operations" and temporarily reduce its staff from 2,055 to one full-time employee, Yahoo Finance reports.

The agency's busy calendar of economic releases will gradually come to a halt, starting with Friday's employment report, known in the financial world as the monthly Jobs report. A similar plan applies to other sources of government economic data.

One of the features of the current government shutdown that could increase economic uncertainty is the White House's promise to consider the possibility of mass layoffs if no agreement is reached. There are no detailed data on the preparation of dismissals, but it is known that at least 400,000 federal officials will be temporarily out of work.

Civil servants, including military personnel, will be temporarily left without pay, but many of them will be asked to continue going to work.

Air traffic controllers and employees of the Transportation Security Administration (TSA) will be asked to work, even though their salaries have been stopped.

As a result of the last shutdown in 2018, there were more than usual unplanned absences, especially among TSA employees, which led to some disruptions.