Wall Street bounces on hopes of end to government shutdown

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

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1.

11th hr rebound: US stocks recovered from lows on Friday on reports Senate Democrats were making a new proposal to end the government shutdown. While Senate Republicans rejected Democrats’ offer to scale back their demands to a one-year extension of expiring health care subsidies, a White House official told Bloomberg the proposal shows Democrats are under pressure to make a deal. The S&P 500 erased a 1.5% low to close up 0.13%, the Dow gained 11 points, while the tech-heavy Nasdaq closed down 0.22% on the day, ending the week down 3.0%, its worst week since President Donald Trump’s ‘liberation day’ tariffs in April. Tesla fell 3.68% during its first session since Elon Musk’s pay package was approved by shareholders while Block closed down 7.7% on weak Q3 earnings. The market volatility came as US consumer sentiment fell to its lowest level in more than three years over concerns about the US government shutdown. Affirm CEO, Max Levchin, told CNBC that furloughed federal workers are beginning to lose interest in spending. (FT)(CNBC)(Bloomberg)(WSJ)(Capital Brief)

2.

Grooming season: Macquarie Group managing director Shemara Wikramanayake confirmed succession planning is underway for when she eventually surrenders the reins at the $76 billion investment house. As departing CFO – and one-time Macquarie heir – Alex Harvey handed down his final half year results, Wikramanayake revealed her own eventual departure was something she and the board were preparing for internally. “In due course, we want me to be succeeded, and we're building a depth of candidates under me and capability”, she said in an interview with Capital Brief. There has been persistent speculation in the market around how much longer Wikramanayake – who enters her eighth year in the role next month – will stick around. When asked on Friday, she clarified she would remain while it was “in Macquarie’s interest” for her to do so. Wikramanayake’s eventual successor will be drawn internally just as her predecessor Nicholas Moore and his predecessor Alan Moss were, Harvey said. (Capital Brief)

3.

System shutdown: White House economic adviser Kevin Hassett warned that the economic impact of the US government shutdown is far worse than expected, with construction projects and travel already suffering. Hassett did not say that any sectors of the US economy are in recession, adding that the economy is likely to rebound quickly once the shutdown ends. Hassett’s comments came as over 800 flights were cancelled across 40 US airports on Friday, as the Federal Aviation Administration slashed 4% of journeys to restrict capacity and ease the workload of air traffic controllers amid the US government shutdown. The cuts are set to escalate to as much as 20% if the ongoing shutdown leads to worsening air traffic control staffing. Meanwhile, the Trump administration told states it is working to comply with a federal court order to pay full November SNAP food stamp benefits during the government shutdown, according to a memo obtained by Politico. The news came just hours after the Trump administration requested an emergency stay on a federal judge’s order to fully fund SNAP food benefits for November, arguing that it did not have to cover the benefits in full during the government shutdown. (US Court of Appeals)(Politico)(Axios)(CNBC)(Capital Brief)(FT)(Reuters)

4.

Procurement at pace: US Secretary of Defense Pete Hegseth unveiled sweeping changes to how the Pentagon purchases weapons on Friday, allowing the military to more rapidly acquire technology. Addressing military commanders, tech leaders and defence contractors at the National War College, Hegseth’s speech was the latest step in the Trump administration’s efforts to streamline weapons procurement. Hegseth outlined plans to strip out what the administration views as “useless regulation”, to compress testing timelines and encourage investment by startups looking to disrupt legacy contractors. “No more endless delays or bureaucratic gridlock,” Hegseth said. “Speed and volume will rule.” Executives from Lockheed Martin, Northrop Grumman, Palantir Technologies and Anduril were in attendance. Meanwhile, the NYT reported that Hegseth has fired or sidelined at least two dozen generals and admirals over the past nine months. The firings came with little explanation and in many cases have run counter to the advice of military leaders, sources told the masthead. (Reuters)(PBS)(Bloomberg)(NYT)

5.

Music pitch: Australian music industry veterans, Jono Harrison and Luke Bevans, are betting that songs can become a serious investment class — and they want Australia to catch up to markets in the US and Europe, where music rights are already being traded as financial assets. The duo’s new venture, Keytin, helps creators understand the value of their music catalogues and open up investment pathways for private capital. Keytin’s first product is an AI-powered valuation tool that assesses the value of artists’ catalogues — whether individual songs, albums or entire collections. The tool draws on data including streaming performance, sync history, social metrics, rights data and market benchmarks. Globally, the investment trend has accelerated through PE and specialist funds which have collectively driven billions into catalogue acquisitions. High-profile sales by artists have drawn attention to the sector, but the deeper transformation has come from institutional investors treating royalties as reliable, securitised revenue streams. (Capital Brief)

6.

Trade thaw: China’s Ministry of Commerce officially suspended its sweeping curbs on exports of rare earths and critical materials until 10 November 2026, formalising part of its trade agreement with the US. The Ministry said that Beijing has paused the export controls it had unveiled in October, prior to Presidents Xi Jinping and Donald Trump meeting in late October. The pause follows a trade deal reached between Trump and Xi late last month at their summit in South Korea, which eased tensions between the two economies after an intensifying trade war roiled markets. While Friday’s suspension does not address an earlier round of Chinese rare earth controls announced in April this year, the White House said on Monday that Beijing agreed to issue “general licences” for shipments of rare earth materials to the US, amounting to the “de facto removal” of the April curbs. However, sources cited by Reuters claim that the new licences do not mean China's wide-ranging rare earth export controls introduced in April have been removed. (China Ministry of Commerce)(Bloomberg)(Capital Brief)(Reuters)

7.

Chips flowing: Dutch Prime Minister Dick Schoof said China has agreed to resume deliveries of Nexperia chips from plants in the country, easing a shortage of the chips which had threatened to paralyse the auto industry. The WSJ reported that German automotive supplier Aumovio said Nexperia’s semiconductors and components containing them were on their way from China to Aumovio’s distribution hub in Hungary. The resumption of Nexperia chip shipments follows a diplomatic turning point between Presidents Xi Jinping and Donald Trump last week. Beijing halted exports of Nexperia chips last month after the Dutch government seized control of the company from its Chinese owner Wingtech, citing risks to economic security. The Netherlands-based Nexperia sends most of its products to facilities in China for packaging and testing before they are delivered to customers. Honda is the only large carmaker to have slowed output due to the chip shortage, which saw it reduce production by 110,000 vehicles in North America. (WSJ)(Bloomberg)

8.

Jakarta attack: At least 55 people were injured during explosions during Friday prayers at a mosque in Jakarta, Indonesia, with authorities identifying a 17-year-old student as the suspected attacker. The incident occurred at around 12:15pm local time (4:15pm AEDT) in a school complex housing the mosque in the Kelapa Gading area. Witnesses told local television stations that they heard at least two loud blasts around midday, from inside and outside the mosque. Most of the victims were students at the school and suffered minor to more severe injuries from glass shards and burns. Indonesia's national police chief, Listyo Sigit Prabowo, said the suspect who was also injured in the blast, was a student at the adjacent school, and an investigation was underway into his background and motive. Indonesia has a history of attacks on churches and Western targets, but attacks against mosques are rare. (ABC)(BBC)(Reuters)