Markets rejoice potential end to US government shutdown
A look at the day ahead in European and global markets from Rae Wee
Global markets are set to start the week with a lot of momentum as investors cheer on the prospect of an imminent end to the historic U.S. government shutdown that has disrupted everything from air travel to major economic data releases.
The U.S. Senate on Sunday, in a procedural vote, advanced a House-passed bill that would be amended to fund the government through Jan. 30 and include a package of three full-year appropriations bills.
If the Senate eventually passes the amended bill, the package still must be approved by the House of Representatives and sent to President Donald Trump for signature; This process may take several days.
However, the positive move was enough to send Nasdaq futures up 1.2% and S&P 500 futures up 0.7% in Asia; European futures are also posting strong gains.
While Asian stock markets remained optimistic, US Treasury bond yields and the dollar rose.
The shutdown took a growing toll on the U.S. economy; federal workers, from airports to law enforcement to the military, are unpaid; The Federal Reserve, on the other hand, is flying almost blind with the government’s limited reporting of economic data.
White House economic adviser Kevin Hassett said in an interview that the U.S. economy could contract in the fourth quarter if the shutdown lasts long.
Friday’s data also showed U.S. consumer confidence weakened to a nearly 3.5-year low in early November amid concerns about the economic impact of the shutdown.
The latest developments have given equity markets a much-needed lift after a turbulent few sessions last week on nerves over rising valuations. artificial intelligence and technology stocks – the sectors that have powered the market this year.
Still, many investors saw the pullback as a respite rather than a sign of a deeper problem.
On the policy front in Asia, minutes of the Bank of Japan’s October meeting showed on Monday that policymakers see a growing case for raising interest rates in the near term.
The discussions raise the chances that the BOJ will raise interest rates next month or in January; The timing depends on whether earnings and executive comments give policymakers enough confidence that firms will continue to raise pay next year.
In China, the CSI300 blue-chip index fell 0.24%, while Hong Kong’s Hang Seng Index rose 0.6%.
Producer price deflation is number one in the world. Data shown Sunday showed the economy eased in October and consumer prices returned to positive territory as Beijing stepped up efforts to curb overcapacity and fierce competition between firms.
