US government shutdown could affect markets globally

THE US is once again staring down the barrel of a government shutdown, and the implications for investors in America and abroad are significant, warns the CEO of one of the world's largest independent financial advisory and asset management organisations.

- STAFF REPORTER

Congress has failed to pass the necessary funding bills, with the deadline expiring tomorrow. Unless lawmakers strike a last-minute deal, large parts of the federal government will shut down.

The standoff comes against the backdrop of soaring deficits, an economy already showing cracks, and political divisions that are as wide as they have been in decades.

Nigel Green, CEO of de Vere Group, comments: "Gold prices have already surged to record highs as investors move into safe-haven assets. Treasury yields are oscillating, with history pointing to declines during shutdowns, but the political rancour and concerns over debt could push them higher this time. The US dollar, which remains the global reserve currency, is vulnerable to shifts in confidence."

He continues: "Shutdowns are not the same as defaults, but they send a damaging signal about political dysfunction in the world's largest economy.

"Investors everywhere are forced to reassess risk, and that has ripple effects across asset classes and geographies.

"Shutdowns in the past have tended to be short and economically manageable, yet this one is being viewed with more trepidation."