The U.S. Senate on Sunday advanced a bipartisan measure to reopen the federal government, potentially ending the 40-day deadlock that has disrupted federal operations, delayed food aid, and strained the nation’s air travel system. The development sparked broad gains across financial markets, with Nasdaq futures climbing 1.2%, S&P 500 futures rising 0.7%, and European indices including EUROSTOXX 50 and DAX advancing more than 1% each. London’s FTSE also gained 0.85%.
Asian markets followed suit, with MSCI’s index of Asia-Pacific shares outside Japan up 1% and Tokyo’s Nikkei 225 adding nearly 1%. Hong Kong’s Hang Seng Index gained 0.6%, though China’s CSI300 slipped slightly by 0.24%.
Market analysts, however, cautioned that volatility could persist until Washington finalizes a resolution. “Markets may see short-term relief, but headline-driven swings are likely to continue until there’s a clear resolution,” said Charu Chanana, chief investment strategist at Saxo.
The legislative process is not yet complete. Even if the Senate passes the bill, the measure must still be approved by the House of Representatives before reaching President Donald Trump for signature — a process that could take several days.
The shutdown, the longest in U.S. history, has already inflicted significant economic damage. Hundreds of thousands of federal workers have gone unpaid, and critical economic data releases have been delayed, leaving the Federal Reserve with limited visibility on key indicators. White House economic adviser Kevin Hassett warned that U.S. fourth-quarter GDP could turn negative if the shutdown persisted. Consumer sentiment data released Friday showed confidence slumping to its lowest level in three and a half years.
“While a deal would restore confidence and liquidity, it doesn’t undo the growth dent from what’s now the longest shutdown in U.S. history,” Chanana added.
Meanwhile, U.S. Treasury yields ticked higher, with the 10-year yield up 3.5 basis points to 4.13%, and the two-year yield at 3.59%. In currency markets, the dollar steadied after recent losses, with the euro down 0.08% at $1.1556 and sterling slipping 0.14% to $1.3147. The dollar rose 0.3% against the yen to 153.91.
Traders are now watching the Federal Reserve’s next policy moves, with markets pricing in a 63% chance of a rate cut in December. Economists at ANZ noted that most Fed officials appear cautious about easing too quickly, with upcoming data expected to shape the final decision.
In Asia, the Bank of Japan’s latest meeting summary revealed growing discussion around a potential rate hike to sustain wage growth momentum.
Commodity prices also climbed amid the improved risk sentiment. Brent crude rose 0.72% to $64.09 per barrel, U.S. crude gained 0.8% to $60.23, and spot gold advanced 1.4% to $4,055.05 an ounce.
Overall, the prospect of an end to Washington’s political gridlock lifted global sentiment — though investors remain alert for the next twist in the ongoing fiscal saga.
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