U.S. equities pushed to fresh record highs overnight, shrugging off concerns around the government shutdown, now in its second day. Historically, shutdowns have not derailed markets, with the S&P 500 often posting gains during these periods though past averages are skewed by the strong rally during the 2018–19 shutdown when the Federal Reserve pivoted dovish. This time, the shutdown will delay key economic releases, including initial jobless claims and September nonfarm payrolls. At the close, the S&P 500 gained 0.06%, the Dow Jones rose 0.17%, and the NASDAQ advanced 0.39%.

Commentary from Industry Leaders 

Yesterday at Centuria’s Annual Investor Event, Damien McColough, Head of Rates Strategy at Westpac Institutional Bank, shared his outlook on the economy and markets.

Damien described Australia’s economy as being in a “slow-motion recovery,” with a gradual transition underway from public to private sector activity, though progress remains “stop-start.” The Reserve Bank of Australia is expected to maintain a cautious stance, with gradual easing to remove restrictive interest rates over time.

On a global level, Damien highlighted that large and sustained fiscal deficits will challenge traditional economic drivers and raise the cost of funds. He noted that market interest rates are likely to remain “higher for longer.” He also pointed to a broader backdrop of uncertainty, as the “Pax Americana” that has underpinned Western economies for the past 80 years is being unwound. Themes such as “de-dollarisation” are only beginning to emerge and have yet to fully play out.

Despite these headwinds, Damien emphasised that Australia remains well-positioned to benefit from shifts in global investor expectations. Key advantages include:

• Maintenance of its sovereign AAA credit rating.

• A strong fiscal position. 

• A robust institutional framework and centrist political environment. 

• Geographic importance within the Asia-Pacific region. 

• Deep and liquid financial markets that support global capital flows. 

Economic News 

The U.S. government has officially entered its first shutdown in more than six years after Congress failed to agree on a new funding bill. The deadlock centres on healthcare subsidies under the Affordable Care Act, with Democrats pushing for an extension and Republicans refusing to compromise. During a shutdown, non-essential government services close, and hundreds of thousands of federal employees are furloughed without pay. Essential services such as defence, security, and postal operations continue, but workers won’t be paid until funding is restored.

Investors should expect near-term volatility in Treasuries and gold as safe-haven demand rises, while equities may remain resilient given historical precedent. Sectors tied directly to government spending (defence contractors, federal services) face greater uncertainty, but broader U.S. equities have typically looked through shutdowns once resolved.

Market Snapshot 

• Australia: ASX is declining, currently weighed down by energy stocks. 

• United States: Dow 0.17%, S&P 500 0.06%, Nasdaq 0.39%. 

• Bonds: US 10-year yield at 4.08% and Australian 10-year yield at 4.33%.  

• Gold: Decreased overnight.

Key Events Coming Up

• Thursday, October 9, 2025: Fed Chair Powell Speaks 

• Thursday, October 9, 2025: US Initial Jobless Claims 

• Friday, October 10, 2025: Nonfarm Payroll (Sep) 

• Friday, October 10, 2025: US Unemployment Rate (Sep) 

Investment Update

The Ophir Global Opportunities Fund provides investors with concentrated exposure to high-quality small and mid-cap companies around the world. The Fund employs a rigorous, bottom-up investment process that focuses on identifying businesses early in their growth cycle, often before they are widely recognised by the broader market. The team favours cash-generative companies with strong balance sheets, high-quality management, and operating in structural growth sectors.

Since inception in October 2018, the Fund has delivered +18.8% p.a. (net of fees), significantly outperforming its benchmark, the MSCI World SMID Index (+9.4% p.a.). Performance over shorter periods has also been strong, with the Fund returning +40% over the past 12 months (vs. +18% for the benchmark) and +4.9% in August alone (vs. +2.1%).

The portfolio typically holds 20–50 stocks and currently invests across 48 companies with a weighted average market cap of A$4.6bn. Top holdings include names in biotechnology, aerospace & defence, software, and trading distribution. Importantly, the managers Andrew Mitchell and Steven Ng are significant investors in the Fund themselves, ensuring alignment with clients. 

The Fund sees ongoing tailwinds for small caps as rate cuts in the U.S. and abroad support market breadth and valuation appeal. Ophir continues to target reasonably valued businesses with resilient earnings growth, balancing cyclical and defensive exposures. With small and mid-caps trading at attractive discounts relative to large caps, the team believes the opportunity set remains compelling.