SINGAPORE, Nov 10 — Global shares rose on Monday on optimism that an end to the historic United States (US) government shutdown was in sight, while yields rose and the dollar nursed losses from last week.
On Sunday, the US Senate moved forward on a measure aimed at reopening the federal government and ending 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 1.27 per cent, while S&P 500 futures rose 0.74 per cent. EUROSTOXX 50 futures and DAX futures jumped about 1.5 per cent each, while FTSE futures gained 0.85 per cent.
MSCI's broadest index of Asia-Pacific shares outside Japan was up 1.36 per cent and Japan's Nikkei advanced 1.33 per cent.
"A possible end to the longest-running US shutdown is a positive for markets. Our expectation is that the next step is for a House vote on Wednesday, with the government set to re-open this Friday," said TD Securities senior Asia-Pacific rates strategist Prashant Newnaha.
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 growing toll on the US 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 the nation's fourth-quarter GDP could be negative if the shutdown dragged on. Data on Friday showed that US consumer sentiment slumped to near a three-and-a-half-year low in early November as households worried about the economic fallout.
"While a deal would be market-friendly by restoring confidence and liquidity, it does not undo the growth dent from what is now the longest shutdown in US history," said Saxo chief investment strategist Charu Chanana.
Still, overall risk sentiment remained upbeat on Monday.
In China, the CSI300 blue-chip index reversed early losses to last trade 0.3 per cent higher, while Hong Kong's Hang Seng Index rose 1.5 per cent.
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.
US Treasury yields edged higher, with the benchmark 10-year yield up more than four basis points to 4.1355 per cent. The two-year yield rose roughly 3.8 bps to 3.5949 per cent.
In currencies, the dollar recovered some of its losses from last week, as investors assessed the outlook for the US economy against a more hawkish US Federal Reserve (US Fed).
While recent data stoked worries about a weakening US labour market, a slew of US Fed officials last week reiterated their preference for going slow on further rate cuts.
Against the dollar, the euro was down 0.04 per cent to US$1.1561. Sterling fell 0.06 per cent to US$1.3157 while the dollar index steadied at 99.62.
Markets are currently pricing in a 63 per cent chance that the US Fed will cut rates in December.
"On balance, the US Fed talk last week was in favour of holding off on easing in December, though most speakers were regional US Fed presidents who do not vote. For now, we see the 12-member voting panel of seven governors and five regional Fed presidents voting for a 25 bp rate cut, with both hawkish and dovish dissents occurring.
"We do not see a rate cut as a foregone conclusion yet and acknowledge the decision will depend on the incoming data and the balance of risks associated with the outlook," said economists at ANZ in a note.
Against the yen, the dollar was up 0.33 per cent to 153.96.
Bank of Japan policymakers saw a growing case for raising interest rates in the near term, with some calling for ensuring companies' wage-hike momentum is sustained, a summary of opinions at the October meeting showed on Monday.
In commodities, oil prices rose, with Brent crude futures up 0.83 per cent to US$64.15 per barrel, while US crude gained 0.92 per cent to US$60.31.
Spot gold was up 1.9 per cent to US$4,074.81 an ounce.
