Wall Street was poised to open with significant losses on Friday as the possibility of a government shutdown just before Christmas moved closer to reality after the House of Representatives decisively rejected the new president. Donald Trump’s new plan to finance operations and the debt ceiling.
Future for the S&The P500 was down 1% before the bell, while futures on the Dow Jones Industrial Average were down 0.6%.
Lawmakers failed to reach the two-thirds threshold needed to advance before Friday’s midnight deadline, but House Speaker Mike Johnson said he and other Republicans were determined to regroup and with find another solution to prevent a shutdown.
It was a huge setback for Trump and his billionaire ally. Elon Muskwho railed against Johnson’s bipartisan compromise, which Republicans and Democrats had previously reached to avoid a government shutdown over the Christmas season.
The standoff late Thursday could be a taste of the turbulence ahead if Trump returns to the White House with Republican control of the House of Representatives and the Senate. During his first term, Trump led Republicans to the longest government shutdown in history during the Christmas period of 2018.
“Next year will be a time of enormous challenges for the global economy,” Carl B. Weinberg of High Frequency Economics wrote in a note to clients, citing U.S. political uncertainty, expected global trade wars and geopolitical uncertainty. “We don’t look ahead. on these changes.”
In premarket trading Friday, shares of FedEx rose 9% after the package delivery company blew past second-quarter profit forecasts and announced it would spin off its freight division into a separate publicly traded company.
Nike fell 4.2% after giving lower guidance for the current quarter, and US Steel fell 7% after announcing negative fourth-quarter results.
Markets are also awaiting US personal spending data for November, due later in the day.
In Europe, Britain’s FTSE 100 lost 0.9% around midday, Paris’ CAC 40 fell 1.2% and Germany’s DAX was 1.5% lower.
Tokyo’s Nikkei 225 index fell 0.3% to 38,701.90 after the release of November inflation data on Friday. Core inflation in Japan, excluding fresh food prices, rose 2.7% year on year, exceeding expectations.
The data followed the Bank of Japan’s decision on Thursday to keep the benchmark interest rate at 0.25%, pushing the dollar higher against the Japanese yen.
The dollar traded at 156.70 yen on Friday, down from 157.43 yen but still higher than the 150 yen average earlier this month.
Hong Kong’s Hang Seng rose 0.2% to 19,720.70, while the Shanghai Composite index fell 0.1% to 3,368.07 after China’s central bank left its lending rates unchanged on Friday. The one-year rate, which affects corporate and most household loans, remained at 3.1%, while the five-year rate, which is used as a benchmark for mortgage rates, remained at 3.6%.
The Australian S&The P/ASX 200 fell 1.2% to 8,067.00. South Korea’s Kospi lost 1.3% to 2,404.15.
In other trades, U.S. benchmark crude lost 45 cents to $68.93 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, fell 41 cents to $72.47 a barrel.
The euro rose from $1.0367 to $1.0401.