Stock futures rose on Sunday evening US time after Senate lawmakers took a key step toward reaching a bipartisan deal to end the nation’s longest government shutdown, boosting investor confidence following weeks of uncertainty.
President Donald Trump told reporters outside the White House that he believed the shutdown ‘was going to end soon’, moments before senators advanced a measure to reopen the government and restore federal operations through January.
The development lifted investor sentiment across global markets, giving Wall Street and overseas exchanges a strong start to the trading week.
Early Trading Yield Positive Results
Futures of multiple shares have gone up following the news of the government reopening. S&P 500 opened at 0.6 per cent while Nasdaq 100 futures is trading 1 per cent higher coming off a rough week.
Nasdaq previously posted its worst week since April, losing 3 per cent while S&P 500 lost 1.6 per cent in a period where valuations in artificial intelligence were alarmingly high compounding the government closure.
‘A risk-off rally on tech AI stalwart names such as Microsoft, Palantir, Nvidia among others has put some near-term concern in this tech bull market,’ Wedbush analyst Dan Ives told his clients in a note on Sunday.
Another stock that recovered from last week is Dow Jones Industrial, which is now 0.17 per cent higher on early trading after shedding 1.2 per cent.
Other shares boost include Japan‘s Nikkei (0.6%), MSCI’s broad index of Asia-Pacific shares (0.5%), South Korea‘s Kospi (2%) and EUROSTOXX 50 and DAX (1.3%).
US Treasury yields also saw a rise in its benchmarks, with its two-year yield moving three basis points and 10-year yield going up to 3.5 BPs.
The Deal that Will Reopen the Government
US senators finally agreed on a deal to pass a federal funding bill that would end the 39-day shutdown, the longest in the nation’s history.
The new deal reportedly includes future protections for government workers against job cuts.
Many federal workers, from airports to law enforcement and military, went unpaid due to the shutdown, worsening its effect on the economy. It also caused federal agencies to halt many economic key reports including the Consumer Price and Producer Prix Index, which had the central bank struggling.
Democrat Senator from New Hampshire Jeanne Shaheen explained why their party agreed to the new federal funding package.
The deal is said to give ‘Democrats control of the Senate floor’ on ‘extending the enhanced premium tax credits to make health care more affordable for millions of Americans,’ she posted on X (formerly Twitter).
Once the bill is passed, it will be sent to the House of Representatives and signed into law to reopen the government in January.
The Shutdown’s Lasting Effects
Although the new funding bill is a breakthrough, the effect of the long closure is expected to linger for a while.
Thousands of government employees who were deemed ‘non-essential’ were either furloughed or temporarily put on unpaid leave, resulting to spending cutbacks. Numerous flights were delayed or cancelled because of air traffic controller shortage, who were forced to work without pay.
Furthermore, the budget for the Supplemental Nutrition Assistance Program or SNAP has run out, leaving its 41 million beneficiaries scrambling.
While the stock market was able to experience some reprieve, most US citizens will have to tighten their belts a bit longer until the effect of the shutdown is no longer felt.
Originally published on IBTimes UK
