US Government Crisis Averted: Global Markets Optimistic

Global Markets Recovering Amidst US Government Crisis

The passage of the bill allowing the US government to temporarily reopen in the House of Representatives and Donald Trump's signature have increased the optimism observed in Wall Street stock markets.

Current Market Situation

In the last four closing sessions, the S&P 500 index and many sectors showed an increase based on median performance. As of Wednesday, about 300 stocks within the equity index saw their values rise, while the volatility index affected large technology companies. The S&P 500 closed the day flat, while the Dow Jones rose for the fourth consecutive day, reaching an all-time high. The cryptocurrency Bitcoin, on the other hand, retraced its gains.

US Treasury Bonds and Interest Rate Expectations

The yields on US Treasury bonds fell amid expectations that the Federal Reserve (Fed) would reduce interest rates next month to support the labor market. For instance, the yield on 10-year bonds decreased by 5 basis points, while 2-year bonds closed down by 2 basis points.

Expert Opinion

Seema Shah from Principal Asset Management predicted that the reopening of the government and the resumption of data releases would increase the likelihood of a Fed rate cut in December, positively impacting risk appetite. Shah stated, “This environment will likely reflect positively on US stocks ready to benefit from a loose Fed policy, particularly large technology and cyclical companies.”

Market Reactions from Past to Present

In the new trading day, limited increases were recorded in US and European futures indices following the approval of the bill to open the US government. Asian stocks and the MSCI All Country World Index experienced slight fluctuations as investors took a cautious approach to the reopening of the US government. Gold continued its rise for the fifth consecutive day following increased expectations for further interest rate cuts resulting from the reopening of the US government.