US Senate vote fails to end shutdown

Good morning. Here's what happened overnight and what you need to know today.

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1.

Shutdown reality: The Trump administration froze USD18 billion ($27.2 billion) in infrastructure funding for New York, home to Congress' top two Democrats, following through on a threat to use the shutdown of the US government to target Democratic priorities. The freeze affects two major New York City transit projects, the Hudson Tunnel and the Second Avenue Subway. In a post on X, Russell Vought, the director of the US Office of Management and Budget said the action was related to “unconstitutional DEI principles.” The first shutdown in nearly seven years has also halted scientific research, financial oversight, environmental cleanup efforts and other government functions. A vote to end the shutdown on Wednesday local time, hours after it started, failed, with senate Democrats and Republicans again rejecting each other’s short-term funding proposals. Democrats are demanding Republicans reverse healthcare cuts, while the administration is threatening mass layoffs and further funding cuts. The US congressional budget office estimates that 750,000 government employees are being furloughed, at a cost per day of USD400 million in lost compensation. (Capital Brief)(Bloomberg)(Reuters)(NYT)

2.

Shrugging bull: Wall Street’s main stock indexes rose, with support from the healthcare and technology sectors, despite weaker-than-expected private payrolls data and uncertainty around the duration of the US federal government shutdown. The Dow Jones Industrial Average rose 0.09%, the S&P 500 gained 0.34% and the Nasdaq Composite added 0.42%. The S&P 500 healthcare sector climbed again, led by pharmaceutical companies a day after Pfizer and Trump said they had cut a deal for lower Medicaid drug prices in exchange for tariff relief. Tech stocks including Tesla and Apple also helped push indexes higher. Shares in AES gained almost 17% after The Financial Times reported BlackRock’s Global Infrastructure Partners was nearing a USD38 billion deal to acquire the utility group. Peloton shares fell after it overhauled its prices. The ADP National Employment Report showed private payrolls fell by 32,000 in September after a downwardly revised 3,000 decline in August. Economists had forecast an increase of 50,000 jobs, according to Reuters. It comes amid uncertainty about whether the Labor Department’s September jobs report, scheduled for release on Friday, will be delayed as the shutdown continues.

3.

Zombie fund: The future of Victoria's flagship innovation fund hangs in the balance as the Labor government under Jacinta Allan confirmed it has received a highly anticipated review into the $2 billion vehicle and is now considering its findings. Speculation is mounting in Victoria's venture capital ecosystem that Breakthrough Victoria may be prevented from making further investments after already facing a cut to its funding earlier this year, as the government attempts to rein in the state's spiralling budget deficit. Two venture capital industry sources told Capital Brief they were recently informed that BTV is currently not deploying capital. The Allan government declined to answer questions about the future of BTV, but a source confirmed it had recently received a review into the fund, and is now considering its findings. Breakthrough Victoria has been plagued by criticism over its governance structure and accused of lacking transparency as it is exempt from Freedom of Information requests. (Capital Brief)

4.

Targeted AI: Meta will begin using the interactions users have with its generative AI tools to personalise content and target advertising across its Facebook and Instagram apps. The tech giant said that users will be notified of the changes from 7 October, which will take effect from 16 December and will not be given the option of opting out of the update. The changes mean that users will begin to see recommended posts or ads about topics that they discuss with Meta’s AI chatbot, or chatbot voice conversations through Meta headsets. The rollout will begin in most regions and expand over time, excluding the UK, EU and South Korea. Elsewhere in AI, OpenAI partnered with Samsung and SK Hynix as part of the AI giant’s Stargate initiative and will see the firms increase their supply of advanced memory chips for the next generation of OpenAI’s artificial intelligence as well as expanding data centre capacity in Korea. (Capital Brief)(Meta)(Bloomberg)

5.

Musical chairs: The US Supreme Court refused to allow President Donald Trump to immediately oust Federal Reserve Governor Lisa Cook as she sues to keep her job. The Supreme Court said it is deferring action on Trump’s bid to remove Cook from her post while the Justice Department appeals a lower court ruling that said she was likely to win her lawsuit over the firing. The ruling is scheduled for January 2026, meaning Cook will be able to remain in her position until at least that point in time. In August, Trump accused Cook of fraudulently listing homes in Michigan and Georgia as “primary residences” in mortgage documents before joining the Fed in 2022, which Cook denies. Meanwhile, the Trump administration withdrew its nominees to lead the Bureau of Labor Statistics and the CFTC after running into political resistance. Separately, Trump nominated Travis Hill, acting chair of the FDIC, to helm the US bank regulator. (Supreme Court order)(WSJ)(Bloomberg)(Capital Brief)

6.

Fighting words: Prominent fund manager Geoff Wilson accused L1 Capital of "stealing money from shareholders" after it proposed to change the management fees of one of Platinum Asset Management's listed investment companies. On Wednesday, L1 Capital completed its merger with ASX-listed Platinum Asset Management with the new entity named L1 Group. L1 Capital shareholders hold 74% of the merged group while Platinum shareholders hold the remaining 25%. In August, both L1 and Wilson Asset Management (WAM) put in proposals to manage the Platinum Capital LIC. Each party also nominated three directors to the PMC board and this was voted on at an extraordinary general meeting on Wednesday. L1’s director nominees were voted in. “It was really disappointing in L1’s management of Platinum. All they needed to do was put their fund manager in to manage the PMC. They didn't have to change the fees…they're stealing money from shareholders” Wilson told Capital Brief. (Capital Brief)

7.

Asset arsenal: Russia may nationalize and swiftly sell off foreign-owned assets in retaliation for European moves to seize Russian holdings abroad, Bloomberg reported citing an unnamed person close to the government. President Vladimir Putin on Tuesday signed an order allowing for fast-track sales of state-owned assets under a special procedure. The decree, published on the government’s website, limits pre-sale valuations to 10 days, speeds up state registration of ownership and appoints state-owned Promsvyazbank PJSC to handle such deals. Putin’s order emphasized that the changes were a response to sanctions against Russia. The move comes as EU leaders meeting in Denmark build momentum for a plan to provide Ukraine with EUR140 billion ($248.3 billion) in loans from immobilized Russian central bank assets, ahead of a formal summit at the end of this month. Hundreds of western companies still operate in Russia, including UniCredit, Raiffeisen Bank International, PepsiCo Inc and Mondelez International. The total value of confiscated property since 2022 reached 3.9 trillion rubles as of June. (Bloomberg)

8.

Flotilla intercepted: Israel intercepted several boats from the Global Sumud Flotilla, carrying climate activist Greta Thunberg among about 500 people, as they tried to break the blockade of Gaza, flotilla organisers said. The Sirius and other vessels were reportedly boarded in international waters, livestreams were cut and the status of passengers was unclear. Organisers called it an illegal attack on unarmed humanitarians. Israel released a video of a naval officer telling the flotilla it was “approaching a blockaded zone” and must divert to Ashdod port, saying the mission was a provocation rather than aid. The flotilla of over 40 boats carrying about 500 people, including parliamentarians, lawyers and Thunberg, had earlier reported drone attacks and jamming of communications. France urged Israel to ensure participants’ safety while Spain condemned the interception. Meanwhile, The Wall Street Journal reported that Arab mediators said Hamas has indicated it is open to Donald Trump and Benjamin Netanyahu’s 20-point Gaza plan but has reservations about its terms. (WSJ)(NYT)(Reuters)