Stock markets worldwide have posted significant gains as investors welcome the prospect of an end to the prolonged US government shutdown. The possibility of a deal to reopen the government has eased concerns about the economic impact of the shutdown, which had begun to worry investors. A bipartisan agreement has been reached to fund operations through January, and a formal debate is set to take place.
The potential reopening of the US government has helped to alleviate fears about extended tech valuations and the AI bubble. Investors are also hopeful that the resumption of government operations will provide clarity on US inflation and the labor market, which will inform the Federal Reserve’s decision on interest rates. The Fed has been “flying blind” since October due to a lack of data, and the shutdown has disrupted the release of key economic indicators.
The US government shutdown, which has lasted for over 40 days, has started to cause concerns about its impact on the economy, particularly with regards to food benefits for low-income households and air travel disruptions ahead of the Thanksgiving holiday. However, analysts note that shutdowns have not typically had a significant bearing on the economy or financial markets.
The news of a potential deal has boosted investor optimism, with Wall Street opening higher across the board. European indices have also risen sharply, following gains in Asia, as investors take heart from easing China-US tensions. Beijing has announced that it will suspend “special port fees” on US vessels for a year, simultaneously with Washington’s pause on levies targeting Chinese ships.
The dollar has steadied against the euro and the pound, while rising against the yen. Oil prices have gained slightly after losses last week due to concerns about supply and demand. The key figures at 1435 GMT show significant gains across major stock markets, including the Dow, S&P 500, and Nasdaq.
The potential end to the US government shutdown is a significant development, as it could provide clarity on the US economy and inform the Federal Reserve’s decision on interest rates. Investors will be watching closely as the situation unfolds, and the impact on the global economy and financial markets becomes clearer. With the shutdown potentially ending soon, investors are hopeful that the US economy will continue to grow, and the stock market will remain stable.