World Stocks Up, Wall Street Races 1% As US Shutdown Shows Signs Of Closure

Global equity markets rallied on Monday amid renewed optimism that Washington was close to ending the longest U.S. government shutdown in history. The upbeat sentiment rippled across regions, lifting stocks, bond yields, and the dollar.

The U.S. Senate on Sunday advanced a bill to reopen federal agencies after a 40-day stalemate that left hundreds of thousands of workers unpaid and disrupted sectors ranging from aviation to food assistance. Lawmakers are expected to finalize a short-term funding measure through January 30, coupled with three full-year appropriations bills.

The development sparked a strong response on Wall Street futures, with Nasdaq contracts climbing 1.5% and S&P 500 futures up nearly 1%. In Europe, the pan-European STOXX 600 surged 1.4%, supported by a rally in Diageo shares after the drinks giant announced a new chief executive. Asian markets followed suit — Japan’s Nikkei gained 1.26%, and MSCI’s index of Asia-Pacific shares outside Japan advanced 1.3%.

“A potential resolution to the shutdown is a clear market positive,” said Prashant Newnaha, Senior Asia-Pacific Rates Strategist at TD Securities. “We anticipate the government reopening later this week once the House votes on the Senate’s proposal.”

Also Read: US Shutdown Cripples Air Travel Over 2,700 Daily Cancellations | Republic World

The prolonged shutdown has weighed heavily on the U.S. economy, with analysts warning of slower growth and shaken consumer sentiment. White House economic adviser Kevin Hassett recently cautioned that fourth-quarter GDP could even turn negative if the impasse persisted.

Meanwhile, risk appetite returned to markets. Gold rose over 2% to a two-week high of around $4,079 per ounce, buoyed by Fed rate cut expectations and a softer dollar. Oil prices also firmed, with Brent crude at $64.16 a barrel.

U.S. Treasury yields edged up, with the benchmark 10-year reaching 4.13%. The dollar strengthened modestly to 154.09 yen as investors balanced weak U.S. data against cautious Federal Reserve signals.

Investor focus now shifts to whether policymakers can cement a deal swiftly enough to prevent further economic damage — and keep global markets’ newfound optimism intact.