Stocks mostly rise on hopes of US shutdown deal, rate cut ~ EconomyLens.com

London (AFP) – World stock markets mostly rose Wednesday on optimism the US government shutdown was nearing an end and on hopes of another Federal Reserve interest rate cut. Wall Street stocks edged ahead after the opening bell ahead of a congressional vote expected to reopen the government after the longest shutdown — six weeks — in US history. The House of Representatives appeared likely to vote Wednesday on a spending bill to solve the budget standoff, after eight Democrats broke ranks in the Senate on Monday.

Around 20 minutes into trading, the Dow Jones Industrial Average had added around 0.8 percent while the broad-based S&P 500 added 0.3 percent, while the tech-rich Nasdaq edged into the red after several days of gains. Adam Sarhan of 50 Park Investments said the market needed concrete signals about the economy after the shutdown resulted in a dearth of economic data. “Investors are going to wait for the next bullish catalyst, which could be Nvidia, arguably the most important AI stock out there right now,” Sarhan said. The chipmaker is set to report earnings on November 19.

Paris and Frankfurt both gained just over one percent, while London was up 0.3 percent. In Asia, Hong Kong and Tokyo ended higher but Shanghai edged lower. “The prospect of an end to the US government shutdown later today is fuelling demand for risk assets,” said Kathleen Brooks, research director at trading group XTB. After passing the Senate, a spending bill to reopen the US government is due before the House of Representatives and then President Donald Trump, with hopes services can resume as soon as Friday.

Investors have welcomed the deal, which would end a shutdown that began on October 1 and saw a million federal workers unpaid, food benefits for low-income Americans threatened, and thousands of flights cancelled. The dearth of key data points has left traders and the Federal Reserve unable to make informed decisions on policy. “The end of the shutdown is positive for financial markets as we should get a clear read on economic data in the next week or so,” Brooks said.

Adding to the upbeat mood were expectations for a Fed rate cut in December after data from private payrolls firm ADP added to recent reports pointing to a softening US labour market. “Investors want — and need — this data to be soft enough to justify another 25 basis point rate cut from the Federal Reserve in December,” said Ipek Ozkardeskaya, senior analyst at Swissquote bank. Wall Street had closed mixed Tuesday amid worries about elevated tech valuations following a breathtaking AI-fuelled rally this year.

Traders were also spooked by news that Japanese investment titan SoftBank had sold all its shares in US chip giant Nvidia for $5.8 billion, without giving a reason. Shares in Nvidia fell three percent on Tuesday but clawed that back Wednesday, and SoftBank plunged as much as 10 percent in Tokyo after Wednesday’s open before closing down 3.5 percent.