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Stocks surge on optimism about possible end of US government shutdown

The dollar continued to suffer from losses last week, despite the optimism of a possible end to the historic U.S. shutdown.

On Sunday, the U.S. Senate moved toward a vote to reopen the federal government. This came a day after Senate majority leader John Thune announced that bipartisan discussions in the chamber had taken a positive direction.

Nasdaq Futures gained 1.1%, while S&P500 futures increased by 0.65%.

The Nikkei, Japan's stock market index, rose 1% and MSCI's broadest Asia-Pacific share index outside Japan gained 0.9%.

Charu Chanana is the chief investment strategist of Saxo.

The Senate may pass the bill but it must be approved by both the House of Representatives, and then sent to the President Donald Trump, who will sign the bill. This process could take several hours.

The shutdown is taking a toll on the U.S. Economy. Federal workers, from airports to the military and law enforcement are not paid. Meanwhile, the central bank has limited access to government data.

Kevin Hassett, White House economist, said in an exclusive interview that the fourth-quarter GDP of the United States could be negative if shutdown continues. The data released on Friday showed that the U.S. consumer's sentiment fell to a low of about 3-1/2 years in early November, as consumers worried about economic consequences.

Chanana said that while a deal could be beneficial to the market by restoring trust and liquidity, the damage done to the economy from the U.S. shutdown, which is now the longest in history, would not be reversed.

On Monday, the overall risk sentiment was still positive.

The FTSE Futures rose 0.8%, and the EuroStoxx 50 Futures and DAX Futures each gained nearly 1.4%.

Hong Kong's Hang Seng Index grew 0.6%, while the CSI300 blue chip index in China fell 0.14%.

China's producer prices were revealed in data released on Sunday

Deflation

As the government intensifies its efforts to curb excessive capacity and intense competition between firms, consumer prices have returned to positive territory.

The benchmark 10-year Treasury yield increased by 3.5 basis points, to 4.1278%. The yield on the two-year bond rose by about 3 basis points to 3.5886%.

The dollar has recovered some of the losses it suffered last week as investors weighed the prospects for the U.S. economic outlook against a Federal Reserve that is more hawkish.

Despite recent data that fueled concerns about a weakened U.S. labor market, Fed officials reiterated last week their preference to go slow with further rate reductions.

The euro fell 0.06% against the dollar to $1.1558. The pound fell by 0.1%, to $1.3152. Meanwhile, the dollar index remained at 99.64.

The markets are pricing in 63% of the chance that Fed will reduce rates in December.

In a recent note, ANZ economists said that "the Fed's talk last week was overwhelmingly in favor of delaying easing until December," even though the majority of speakers were regional Fed Presidents who do not vote.

For now, the 12-member panel, which includes seven governors and 5 regional Fed presidents, is voting in favor of a 25-bp rate reduction, with both dovish and hawkish dissents. We do not see a rate reduction as a foregone conclusion and recognize that the decision will be based on the incoming data, and the balance of the risks associated with the future.

The dollar rose 0.3% against the yen to 153.90.

Bank of Japan policymakers have seen a

Growing

A summary of the opinions expressed at the October meeting on Monday showed that there was a case for raising interest rates soon, and some argued the need to maintain the wage-hike momentum in companies.

Brent crude futures rose 0.53% per barrel to $63,97, while U.S. Crude gained 0.6% at $60.11.

Spot gold rose 1.2%, to $4 047.23 per ounce.

(source: Reuters)