US Markets Rally After Potential Shutdown Deal – Nasdaq up 2.27%
US markets rallied strongly overnight as optimism grew that the prolonged government shutdown could finally come to an end this week after the Senate approved a key funding deal. The upbeat mood sent all three major indices sharply higher, with the Dow climbing 0.81% to close at 47,368, the S&P 500 surging 1.54% to finish at 6,832, and the tech-heavy Nasdaq leading the way with a 2.27% gain to 23,527. The dollar also moved further north, with the DXY edging up 0.07% to 99.63, while Treasury yields also firmed. The 2-year yield rose 2.7 basis points to 3.589%, and the 10-year increased by 1.9 basis points to 4.116%. Commodities were also active, with oil prices continuing to push north amid ongoing supply concerns. Brent crude added 0.64% to settle at $64.03, while WTI gained 0.59% to close at $60.10. Gold was one of the standout performers of the session, surging 2.86% to $4,115.76 as it broke out of recent consolidation ranges.
UK Data in Focus for Sterling Traders This Week
Sterling traders are expecting another busy week with some key data due out that could move Bank of England rate expectations significantly. Key concerns for the MPC, which had increased chances of a rate cut last week, have been both the jobs market and economic growth, and we have data from both in the days ahead this week. Tonight, we see key jobs data hitting the market, with expectations that the Claimant Count and Unemployment Rate will both tick up again, while later in the week GDP data is expected to fall on both a monthly and quarterly basis. The market is now pricing in a 75% chance of a 25-basis point rate cut in December, and significant prints away from expectations in the data this week could see big moves in both Cable and sterling crosses.
Busy Day Ahead for Traders
It’s shaping up to be a busier day today, with traders bracing for increased volatility following yesterday’s strong market moves and some key risk events also scheduled. The Asian market will open on the front foot after those strong moves on Wall Street last night; however, the focus will move to New Zealand midway through the day with key Inflation Expectations data (last 2.28%) due out. UK markets will be in focus shortly after the London open with key employment numbers due — the Claimant Count (exp. +17.6K), Average Earnings Index (exp. 5.0%), and Unemployment Rate (exp. 4.9%) are all released at the same time, and traders are expecting plenty of moves in the pound around the event. Liquidity could tighten later in the day, however, with both US and Canadian markets closed for holidays, which could see some moves exacerbated, especially after yesterday’s volatility.
