Sunday, 5th April 2026
Khabor Wala Desk
Published: 10th November 2025, 11:57 AM
Equities surged on Monday as investors grew optimistic that the US government shutdown could soon come to an end, following reports that lawmakers had reached a deal to resolve the 40-day impasse, the longest in history.
The potential resumption of operations in the world’s largest economy helped alleviate concerns about the high valuations of tech stocks, particularly in light of discussions around an artificial intelligence (AI) bubble after this year’s substantial rally.
As the shutdown continued, investors had become increasingly anxious about its economic impact, especially after several key government services were suspended, including air travel, which could affect the Thanksgiving holiday.
A survey from the University of Michigan last week showed a decline in consumer sentiment for November, compared with October, highlighting the growing unease among the public.
However, optimism returned on Sunday after CNN and Fox News reported that senators had reached a bipartisan stopgap deal, which would fund US government operations through January. The deal followed tense negotiations over healthcare subsidies, food assistance, and the controversial firing of federal employees by former President Donald Trump.
US President Joe Biden confirmed the reports, stating, “It looks like we’re getting close to the shutdown ending.” A procedural vote was scheduled for later that day to finalise the agreement.
The deal would restore funding for food stamps, reverse Trump’s firings of thousands of federal workers, and ensure a vote on extending healthcare subsidies for Americans in need.
Rodrigo Catril from National Australia Bank wrote, “There is a growing sense of urgency to reach a compromise. The economic consequences are mounting: the Congressional Budget Office estimates that the shutdown could shave 1.5 percentage points off quarterly GDP growth by mid-November.”
The positive news surrounding the shutdown resolution provided a lift to Asian markets, with major indices in Tokyo, Hong Kong, Shanghai, Sydney, Seoul, Taipei, and Manila all showing gains. However, there were losses in Singapore and Wellington.
The potential reopening of the government would also enable officials to resume the release of important economic data, including labour market statistics. This is crucial for the Federal Reserve, which is considering whether to implement another interest rate cut next month. With government operations suspended, traders have been relying on private data to gauge the health of the economy. For example, a report from outplacement firm Challenger, Gray & Christmas revealed that US layoffs in October had reached their highest level in 22 years, fuelling speculation about another rate cut.
Nevertheless, several Federal Reserve officials have expressed concerns about inflation, which remains stubbornly high, rather than issues relating to employment.
Chris Weston at Pepperstone noted, “Markets are currently pricing in a 67 percent chance of a rate cut in December. However, recent comments from non-voting Fed members Beth Hammack and Lorie Logan – both of whom indicated they would not have supported the October cut – suggest that the bar for additional easing may be higher.”
Weston added, “The next wave of Tier 1 data, once government operations resume, will be critical for shaping expectations for December.”
While sentiment has improved at the start of the week, there have been growing concerns about stock valuations. Market participants are also wary of the tens of billions of dollars in new investments pouring into the artificial intelligence sector, which has led to questions about whether the current boom could be sustainable.
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