Markets Rally as U.S. Moves Closer to Ending Government Shutdown
The U.S. Senate took a major step on Sunday toward reopening the federal government. Lawmakers advanced a measure that allows them to amend and pass a funding bill that could keep the government running until January 30.
The move sparked optimism across global markets, signaling progress toward ending a 40-day government shutdown that has weighed on U.S. economic growth.
Stock futures reacted immediately. The S&P 500 gained 0.8%, while the Nasdaq 100 climbed 1.3%. Risk-sensitive assets like the Australian dollar strengthened, while traditional safe havens such as U.S. Treasuries and the Japanese yen weakened — reflecting a shift back toward risk appetite.
Market Analysts React
Jack Chambers, Senior Rates Strategist at ANZ in Sydney, said the latest developments suggest “the gears are starting to shift.” He noted that while a full resolution might not happen immediately, markets are already anticipating a positive outcome.
He added that any impact on bond yields will likely be modest, since “markets hadn’t reacted too negatively to the shutdown in the first place.”
George Boubouras, Head of Research at K2 Asset Management in Melbourne, called the progress a “good signal for markets.” He said that while the shutdown has been a drag on the economy, its resolution reinforces the Federal Reserve’s tendency toward policy easing.
Lloyd Chan, Senior Currency Analyst at MUFG in Singapore, explained that a deal to end the shutdown could “lift investor sentiment and reduce data uncertainty.” He also linked the recent rebound in U.S. equities to both technical recovery and growing optimism for a resolution.
Short-Term Relief, Long-Term Questions
According to Hemant Mishr, Chief Investment Officer at S Cube Capital, this funding deal is “an interim solution” that only extends until January 2026, calling the recent rally a “relief rally.”
He warned that the main concern remains the shutdown’s impact on fourth-quarter earnings and the broader economy. However, Mishr expressed optimism that as data releases resume, the economy “will not shrink.”
Prashant Newnaha, Senior Asia-Pacific Rates Strategist at TD Securities, expects a House vote on Wednesday, with a full government reopening by Friday. He noted that although the shutdown has hurt growth, markets likely expect a quick rebound once it ends.
Finally, Vasu Menon, Managing Director for Investment Strategy at OCBC in Singapore, pointed out that gold could benefit from the reopening. If the government releases delayed data showing slower growth, the Federal Reserve could have “room to ease policy sooner,” which would support lower interest rates and strengthen gold prices.
Outlook
Markets are responding positively to Washington’s progress, seeing it as a turning point after weeks of uncertainty. While investors remain cautious about how long the optimism will last, the near-term relief rally suggests confidence is returning — at least for now.
