Stocks rise as US moves toward ending government shutdown

Global stock markets saw strong gains on Monday after the US Senate took initial steps on Sunday night to end the longest government shutdown in US history.

In Europe, the Stoxx Europe 600 index increased by 1.4%, while Germany’s Dax rose 1.8%. In the US, futures tied to the S&P 500 and Nasdaq 100 were up 1% and 1.5%. Investors moved away from safer assets, causing US 10-year Treasury bond yields to rise slightly to 4.13%.

“It’s a relief rally across regions,” said Geoffrey Yu, senior strategist at BNY.

Asian markets also reacted positively. South Korea’s Kospi climbed 3%, Hong Kong’s Hang Seng rose 1.6%, and Japan’s Nikkei 225 closed 1.3% higher.

The market optimism followed news that eight Democratic senators supported a compromise deal to reopen the government and keep it funded until the end of January. The agreement would reverse job cuts made during the shutdown and ensure furloughed workers receive back pay, while Democrats would make concessions on healthcare tax credits.

US tech stocks also gained in pre-market trading: Nvidia rose 3.3%, Tesla 2.4%, and Alphabet 2.2%.

Last week, global markets had fallen—especially tech stocks—due to concerns about high valuations and weaker US economic data. Analysts say reopening the government could help support broader parts of the US economy that depend on government operations.

Richard Yetsenga of ANZ noted that the shutdown had contributed to lower bond yields and falling gold prices. He expects some of these trends to reverse once the government fully reopens.

Despite recent volatility, the US stock market remains near record highs. However, some analysts warn that once the shutdown ends, attention may shift back to concerns over long-term US government spending.

Gold prices jumped 2% on Monday to $4,080 per ounce, while Bitcoin rose 1.6% to around $106,000.

The shutdown is not over yet—the Senate must still formally pass the deal, and the Republican-controlled House must approve it before the President signs it into law.

Reopening the government would also allow the release of important economic data, especially on the labor market, which has recently shown signs of slowing.

“Let’s hope the data doesn’t bring unpleasant surprises,” said BNY’s Yu.