Optimism Returns as U.S. Shutdown Nears Resolution; Global Markets Rebound

Markets started the week on a positive note, buoyed by renewed optimism that the record-breaking U.S. government shutdown may soon come to an end. Equities across Asia, Europe, and the U.S. futures markets rallied, while bond yields climbed as investors rotated away from safe-haven assets. Commodities and cryptocurrencies joined the rally, reflecting a broader rebound in risk sentiment following weeks of political and market turbulence.

Global Market Overview

The MSCI Asia Pacific Index gained nearly 1%, with most regional markets in the green as investors welcomed progress in Washington. U.S. equity futures rose sharply, with S&P 500 contracts up 0.8% and Nasdaq 100 futures advancing 1.3%, while Euro Stoxx 50 futures added 1.4%.

Bond yields edged higher as investors pared back defensive positions; the U.S. 10-year Treasury yield rose four basis points to 4.14%, and similar moves were seen in Japan and Australia. The Japanese yen weakened 0.4% to 153.99 per dollar, while the Bloomberg Dollar Spot Index held steady.

The rotation into equities was underpinned by expectations that the shutdown’s end would restore access to key U.S. economic data—crucial for determining the Federal Reserve’s next policy steps. The shutdown had suspended releases such as employment and inflation data, leaving markets uncertain about the timing of potential rate cuts.

U.S. Government Shutdown Developments

A bipartisan breakthrough in the U.S. Senate marked a decisive move toward ending the 40-day government shutdown, the longest in U.S. history. The Senate voted 60-40 to advance a bill that provides full-year funding for select departments—Agriculture, Veterans Affairs, and Congress—and temporary funding for the rest of the government through January 30. The legislation includes back pay for furloughed workers and reinstates suspended payments to state and local governments.

While the Senate adjourned until Monday without a final vote, the House of Representatives is expected to consider the bill once members return to Washington. Speaker Mike Johnson indicated that lawmakers would be given at least 36 hours’ notice, suggesting that a resolution could materialize later in the week.

The agreement emerged after moderate Democrats broke ranks with party leadership to join Republicans in advancing the measure. Although not all Democrats are satisfied—especially over the exclusion of extended Obamacare subsidies—the move represents a significant de-escalation of partisan tensions that have disrupted federal operations and dampened sentiment across sectors.

According to preliminary estimates, the shutdown has already cost the U.S. economy roughly $15 billion per week, shaving as much as 1.5 percentage points off GDP growth for the current quarter. Its resolution could therefore provide a modest rebound in consumption and business activity heading into year-end.

Commodities and Currencies

Commodities rallied alongside equities. Brent crude climbed above $64 a barrel, supported by improved risk appetite and a potential rebound in U.S. government spending once the shutdown ends. Gold rose for a second consecutive session, closing near $4,071 an ounce, as investors continued to price in higher odds of a Federal Reserve rate cut next month. Silver spiked more than 2%, while copper and soybeans also advanced on the London and Chicago exchanges respectively.

In foreign exchange markets, the euro and sterling were little changed, while the yen weakened as traders unwound safe-haven positions. Meanwhile, Bitcoin rose 1.7% to above $106,000, and Ether gained 0.8%, continuing a steady rebound in digital assets that began late last week.

Corporate Highlights

• Pfizer announced a $10 billion acquisition of Metsera Inc., securing an obesity-drug startup after a bidding war with Novo Nordisk.
• Nvidia’s CEO Jensen Huang requested additional chip supply from TSMC, though reports suggest that TSMC’s October revenues slowed, possibly signaling cooling AI-related demand.
• Visa and Mastercard are close to finalizing a settlement in their long-running dispute with merchants over swipe-fee practices.
• Permira, a private-equity firm, is nearing an agreement to acquire JTC Plc, a U.K.-listed corporate-services provider.

Outlook

If Congress finalizes the shutdown agreement this week, markets may regain access to crucial economic indicators that will guide the Federal Reserve’s December policy meeting. The return of data transparency could stabilize expectations for rate cuts, currently priced for early 2026.

Equities are likely to remain sensitive to incoming corporate earnings—especially Nvidia’s upcoming report, which could influence broader sentiment toward AI and technology valuations. Meanwhile, bond markets may face continued volatility as traders recalibrate yield expectations in light of improving fiscal clarity.

Key Takeaway

The easing of the U.S. political deadlock has triggered a global risk-on rally, lifting equities, commodities, and cryptocurrencies while pushing bond prices lower. The focus now shifts to how swiftly Washington can pass the final funding bill and whether the return of economic data supports the case for Fed easing. Until then, volatility is expected to remain elevated, but market tone has clearly turned more constructive.

Prepared by Nour Hammoury, Chief Market Analyst at SquaredFinancial
Nour is an investor, independent market strategist, and financial advisor. He holds a BA in Finance and Banking Science from Al-Ahliyya Amman University and a CFTe in Economics from the International Federation of Technical Analysts. He has more than 15 years of experience in forex, stocks, and global economic developments, as well as central bank policies and intermarket analysis. He appears regularly on major international TV networks, such as BBC, Al-Jazeera, Al Hurra, CNBC, and Bloomberg, holding open discussions and sharing insights and readings of the markets and trends.

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