(Bloomberg) — Stocks rose and Treasuries fell after US lawmakers reached a deal on the weekend to avoid a government shutdown.
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Europe’s Stoxx 600 index opened about 0.4% firmer on the first trading day of the fourth quarter, while futures on the Nasdaq 100 jumped as much as 0.9% after the compromise legislation passed on Saturday to keep the government running until Nov. 17. Investors are likely to stay jittery, however, as the reprieve shifts the focus back on central banks’ policy path.
Those concerns pushed bond yields steadily higher over the July-to-September period, making the quarter the worst for MSCI’s all-country equity index since September 2022.
“Financial markets were bracing for a shutdown, so there’s an element of relief, but it’s only a temporary lifting of one of the clouds hanging over the markets now,” said Yung-Yu Ma, chief investment officer at BMO Wealth Management. “Interest rates and Fed hawkishness remain the name of the game and the main driver of the markets over the next few weeks.”
Federal Reserve chief Jerome Powell will take part later on Monday in a roundtable discussion, along with Philadelphia Fed President Patrick Harker. US manufacturing activity and jobs data will also be in the spotlight this week after the head of the New York Fed said Friday policymakers should leave interest rates high for some time.
Treasuries dropped after the US government shutdown was averted, with 10-year yields rising about 4 basis points to 4.61%. The dollar strengthened versus all its Group-of-10 peers and briefly touched a year-to-date high of 149.82 against the yen, after the Bank of Japan said it would conduct an additional buying operation.
Elsewhere, oil rose on speculation global demand is running ahead of supply.
Key events this week:
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China has week-long holiday
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Bank of England policy maker Catherine Mann speaks on monetary policy, Monday
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Fed Chair Jerome Powell and Philadelphia Fed President Patrick Harker participate in a roundtable discussion, Monday
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New York Fed President John Williams moderates discussion on climate risk, Monday
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Cleveland Fed President Loretta Mester speaks on economic outlook, Monday
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US ISM manufacturing index, Monday
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Australia rate decision, Tuesday
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Atlanta Fed President Raphael Bostic speaks on economic outlook and inflation, Tuesday
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August US JOLTS report, Tuesday
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Eurozone services and composite PMIs, Wednesday
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ECB President Christine Lagarde gives welcome address at conference, Wednesday
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US ISM services index, Wednesday
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France industrial production, Thursday
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BOE Deputy Governor Ben Broadbent, Riksbank First Deputy Governor Anna Breman participate at panel discussion, Thursday
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San Francisco Fed President Mary Daly speaks at the Economic Club of New York, Thursday
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Germany factory orders, Friday
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September US nonfarm payrolls, Friday
Some of the main moves in markets:
Stocks
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The Stoxx Europe 600 rose 0.4% as of 8:34 a.m. London time
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S&P 500 futures rose 0.7%
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Nasdaq 100 futures rose 0.9%
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Futures on the Dow Jones Industrial Average rose 0.6%
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The MSCI Asia Pacific Index fell 0.2%
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The MSCI Emerging Markets Index rose 0.2%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro rose 0.1% to $1.0584
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The Japanese yen fell 0.2% to 149.65 per dollar
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The offshore yuan was little changed at 7.2978 per dollar
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The British pound rose 0.1% to $1.2212
Cryptocurrencies
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Bitcoin rose 4.1% to $28,235
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Ether rose 3.1% to $1,727.05
Bonds
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The yield on 10-year Treasuries advanced four basis points to 4.61%
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Germany’s 10-year yield advanced two basis points to 2.86%
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Britain’s 10-year yield advanced five basis points to 4.49%
Commodities
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Brent crude rose 0.2% to $92.35 a barrel
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Spot gold fell 0.3% to $1,843.17 an ounce
This story was produced with the assistance of Bloomberg Automation.
—With assistance from Matthew Burgess, Joanna Ossinger and Sujata Rao.
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