New York (AFP) – Stock markets charged higher Monday as investors cheered prospects that the US government shutdown could be nearing an end, after lawmakers reached a deal likely to break the record 40-day impasse. The prospect of operations resuming in the world’s biggest economy helped temper lingering worries about extended tech valuations amid talk of an AI bubble.
“Everyone’s now anticipating we’ll see the government reopen in the next couple of days,” said Jack Ablin from Cresset Capital. That’s “good for the consumer, good for investors, really good for anyone who travels,” Ablin said. A group of Democrats in the Senate sided with Republicans in a procedural vote on the deal Sunday evening, clearing the way for a formal debate after reaching a bipartisan agreement to fund government operations through January.
A government reopening could also provide clarity on US inflation and on the soft labor market, which will determine whether the Federal Reserve cuts interest rates again, as is widely expected next month. “If all goes well, some federal agencies could reopen as soon as Friday,” said David Morrison, senior analyst at Trade Nation. He noted that both investors and the Fed had been “flying blind since the beginning of October, with a near-complete absence of data.”
“Fed Chair Jerome Powell has played down the prospect of another rate cut in December, as it is far from obvious that inflation has peaked,” Morrison added. But as the shutdown entered its 41st day on Monday, investors focused on the US government reopening. They had grown increasingly concerned about the impact of severe disruptions of food benefits to low-income households, and of air travel heading into the Thanksgiving holiday.
“Shutdowns haven’t typically had a big bearing on the economy or on financial markets. But, this one…looked as though it might start to cause some trouble,” said analysts at Capital Economics.
– Rebound after tech worries –
Wall Street opened higher across the board following turbulent losses last week on fears that AI optimism might have pushed tech stocks such as chip heavyweight Nvidia to unsustainable highs. European indices also rose sharply, following similar gains across Asia, with investors also taking heart from a further easing of China-US tensions. Beijing on Monday said it would suspend for one year “special port fees” on US vessels, “simultaneously” with Washington’s pause on levies targeting Chinese ships.
The dollar, which steadied versus the euro and the pound, rose against the yen, while oil prices gained slightly after losses last week over concerns of hefty supply amid uncertainty over global demand. “Risk is back on, and last week’s sell-off seems like a distant memory,” said Kathleen Brooks, research director at trading platform XTB. “There are some risks ahead, but unless we see a meaningful decline in Fed rate cut expectations, or a weak earnings report from (major computer chip-maker) Nvidia next week, then stocks could be poised to rally into year-end,” she said.
– Key figures at 2110 GMT –
New York – Nasdaq: up 2.3 percent at 23,527.17 (close)
New York – S&P 500: up 1.5 percent at 6,832.43 (close)
New York – Dow: UP 0.8 percent at 47,368.63 (close)
London – FTSE 100: UP 1.1 percent at 9,787.15 (close)
Paris – CAC 40: UP 1.3 percent at 8,055.51 (close)
Frankfurt – DAX: UP 1.7 percent at 23,959.99 (close)
Tokyo – Nikkei 225: UP 1.3 percent at 50,911.76 (close)
Hong Kong – Hang Seng Index: UP 1.6 percent at 26,649.06 (close)
Shanghai – Composite: UP 0.5 percent at 4,018.60 (close)
Euro/dollar: DOWN at $1.1563 from $1.1566 on Friday
Pound/dollar: UP at $1.3182 from $1.3162
Dollar/yen: UP at 154.03 yen from 153.42 yen
Euro/pound: UP at 88.00 pence from 87.88 pence
Brent North Sea Crude: UP 0.4 percent at $64.06 per barrel
West Texas Intermediate: UP 0.7 percent at $60.13 per barrel
© 2024 AFP
