By Nell Mackenzie and Rae Wee
LONDON/SINGAPORE (Reuters) -Global shares rose on Monday, lifted by optimism that an end to a historic U.S. government shutdown was in sight, while government bond yields rose and the dollar steadied.
The U.S. Senate moved forward on Sunday on a measure to reopen the federal government and end a now 40-day shutdown that has sidelined federal workers, delayed food aid and snarled air travel.
In a procedural vote, senators advanced a House-passed bill that will be amended to fund the government until January 30 and include a package of three full-year appropriations bills.
The breakthrough helped push Nasdaq futures up 1.5% while S&P 500 futures rose 0.95%.
European shares jumped into this buoyant mood with the pan-European STOXX 600 up about 1.4%, while Diageo shares soared after the world’s largest spirits maker named a new CEO.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up 1.3% and Japan’s Nikkei benchmark advanced 1.26%.
“A possible end to the longest running U.S. shutdown is a positive for markets,” said Prashant Newnaha, senior Asia-Pacific rates strategist at TD Securities.
“Our expectation is that the next step is for a House vote on Wednesday, with the government set to reopen this Friday.”
If the Senate eventually passes the bill, the package must still be approved by the House of Representatives and sent to President Donald Trump for his signature, a process that could take several days.
The shutdown has taken a toll on the U.S. economy, with federal workers from airports to law enforcement and the military going unpaid while the central bank flies blind with limited government reporting of economic data.
White House economic adviser Kevin Hassett said in an interview that fourth-quarter GDP could be negative if the shutdown dragged on.
Data on Friday showed that U.S. consumer sentiment slumped to near a 3-1/2-year low in early November as households worried about the economic fallout.
Mark Haefele, chief investment officer at UBS Global Wealth Management, said allocations to quality fixed-income and gold, as a well-diversified portfolio could help manage risks effectively.
“Overall, the combination of Fed easing and robust corporate earnings remains favorable for stocks, while quality bonds offer appealing risk-reward,” Haefele said in a note.
“Under-allocated investors should add exposure to transformational growth trends including AI.”
Gold rose more than 2% on Monday to its highest level in two weeks at about $4,079 an ounce, on the heady combination of weak U.S. economic data, Federal Reserve rate cuts expectations and a softer dollar.
Still, overall risk sentiment remained upbeat on Monday.
In China, the CSI300 blue-chip index closed up almost 0.4%, reversing early losses, while Hong Kong’s Hang Seng Index rose 1.6%.
Data on Sunday showed China’s producer price deflation eased in October and consumer prices returned to positive territory, as the government steps up efforts to curb over-capacity and cut-throat competition among firms.
U.S. Treasury yields edged higher, with the benchmark 10-year yield up about 4 basis points to 4.13% as a risk-on mood took hold across world markets.
In currencies, the dollar recovered some of its losses from last week, as investors assessed the outlook for the U.S. economy against a more hawkish Fed. [FRX/]
While recent data stoked worries about a weakening U.S. labour market, a slew of Fed officials last week reiterated their preference for going slow on further rate cuts.
Markets are currently pricing in a 63% chance of a December Fed rate cut.
Against the yen, the dollar rose 0.42% to 154.09. The greenback was little changed on the day against the euro and sterling, however.
Bank of Japan policymakers saw a growing case to raise interest rates in the near term, with some calling for the need to ensure companies’ wage-hike momentum will be sustained, a summary of opinions at the October meeting showed on Monday.
In commodities, oil prices rose, with Brent crude futures up 53 cents to $64.16 per barrel, while U.S. crude gained 53 cents to $60.28. [O/R]
(Reporting by Nell Mackenzie and Rae Wee; Editing by Kim Coghill, Dhara Ranasinghe and Clarence Fernandez)
