Global stocks rose on Monday as the longest U.S. government shutdown in history appeared to be nearing an end.
The U.S. Senate has approved the first phase of a bipartisan agreement that could end the government shutdown. The deal provides funding to the government until January 30 next year and could reverse some of the permanent layoffs of civil servants that occurred during the 35-day impasse.
Strategists said a possible end to the shutdown would be a tailwind for investors after a week in which global stocks fell on turmoil in AI and tech stocks.
Jason Paltrowitz, executive vice president of OTC Markets, said Monday on CNBC’s “Europe Early Edition” that the resolution would be positive not only for the U.S. but for the broader global market.
“I think all news is good news,” Paltrowitz said. “I think the market needs to understand that we are getting through this, and I think investors are looking for some assurance both in the economy and their own investments,” he added.
U.S. stock futures were in positive territory ahead of Monday’s opening bell, while European stocks rose on Monday. Stocks 600 The UK rose 1.4%. FTSE100German dachshund and french CAC40 All are in positive territory.
Edmond de Rothschild Asset Management said in a bulletin that it is urging both sides of Congress to restart talks to reach a compromise as the potential for negative economic consequences remains.
The aviation sector has been a key flashpoint in the impasse. The shortage of air traffic controllers due to non-payment of salaries has worsened, leading to a decrease in the number of flights in recent days.
Concerns that thousands of flights over the Thanksgiving holiday would impact travel and leisure stocks now appear to be over. Shares of U.S. airline stocks rose in premarket trading Monday.
The stalemate has also put consumer sentiment under scrutiny as investors grapple with a data outage amid growing concerns about the health of the U.S. economy. The investment strategist pointed out how unlocking data reporting will ultimately improve market transparency.
Jonathan Pingle, chief U.S. economist at UBS investment bank, said the release of the statistics would help reduce uncertainty for the Federal Open Market Committee (FOMC). He said a large amount of data was expected to be released from August, with positive results expected, but after that could be replaced by data that looked “pretty soft” by comparison.
“I think the Fed is stumbling through this fog and the market is looking for some form of clarity,” Pingle said Monday on CNBC’s “Squawk Box Europe.”
Mr Pingle said the closure was a “huge inconvenience” and “a drag on growth”. “There’s a certain amount of cheerleading going on,” Pingle said of the news of a potential trade on Capitol Hill. “Companies will be satisfied that the government is working and that they can get past reports.”
Nick Nelson, global equity strategist at Absolute Strategy Research, said the deal was “good news” for the market. Speaking on CNBC’s “Squawk Box Europe,” he pointed to last week’s weak consumer confidence index and said the longer the shutdown goes without people getting paid, the more it could ultimately depress spending.
