By Mike Dolan -What matters in U.S. and global markets today By Mike Dolan, Editor-At-Large, Finance and Markets Just as U.S. households were fretting about the effect on travel and the wider economy of the longest-ever government shutdown, the U.S. Senate on Sunday finally began the process of re-opening Washington, spurring a rally in U.S. […]
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Morning Bid: A re-open rally
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By Mike Dolan
-What matters in U.S. and global markets today
By Mike Dolan, Editor-At-Large, Finance and Markets
Just as U.S. households were fretting about the effect on travel and the wider economy of the longest-ever government shutdown, the U.S. Senate on Sunday finally began the process of re-opening Washington, spurring a rally in U.S. stock futures and world markets after a bumpy week.
While the process of re-opening government could yet take several days and the proposed Senate bill would only fund government through January, U.S. stock futures jumped about 1% ahead of Monday’s bell and Treasury long bond yields briefly touched their highest in over a month.
The dollar edged lower as risk appetite appeared to be rekindled, although gold, crude oil prices and bitcoin climbed.
The prospect of a deluge of delayed U.S. economic data over the coming weeks is likely to make for noisy and potentially volatile trading, even though there’s a chance some reports may never be released in full, due to data-collection issues.
Wall Street’s VIX volatility gauge, however, slipped back lower from last week’s highs and settled at about 18.6 on Monday.
The messy economic picture for the Federal Reserve is unlikely to clear up any time soon, with futures currently seeing about a two-thirds chance of another interest rate cut next month.
Although the planned end of the Fed’s balance sheet rundown from next month ostensibly cossets Treasury markets to some degree, they have to navigate another heavy week of government debt sales – starting with about $58 billion of 3-year notes on Monday.
Overseas, Japan’s yen weakened again after new Prime Minister Sanae Takaichi said she would work on a new fiscal target over several years to allow more flexible spending – essentially watering down the country’s commitment to fiscal consolidation. Takaichi also called for the Bank of Japan to go slow on interest rate hikes, raising pressure on a central bank sizing up its next hike ahead of December’s policy decision.
Chinese stocks advanced after better-than-feared inflation news at the weekend, which saw annual consumer price growth return to positive territory and producer price deflation easing somewhat in October. While reduced deflation fears may be some relief, they may also cut across pumped-up stimulus hopes to some degree.
But there was other worrying news there about the state of domestic demand. China’s car sales fell unexpectedly in October from a year earlier, snapping an eight-month growth streak, as consumer sentiment weakened amid reduced tax exemptions and government subsidies.
The U.S. earnings season starts to peter out this week meantime and Monday’s diary is thin.
In company news, drugmaker Pfizer clinched a $10 billion deal for obesity drug developer Metsera, capping a fierce biotech bidding war between the New York-based pharma giant and Danish rival Novo Nordisk. Pfizer stock was up 1% out of hours and Novo Nordisk rose 3% in Europe on Monday.
In today’s column, I ask whether the economy will be that much easier to make sense of once government data resumes, as the artificial intelligence boom makes accurate measurement of activity extremely difficult.
Today’s Market Minute
* The U.S. Senate on Sunday moved forward on a measure aimedat reopening the federal government and ending a now 40-dayshutdown that has sidelined federal workers, delayed food aidand snarled air travel. * The BBC boss and its head of news quit on Sunday followingaccusations of bias at the British broadcaster, including in theway it edited a speech by U.S. President Donald Trump. * As COP30 opens on Monday, the biggest question mark at thetwo-week climate summit was whether participating countrieswould aim to negotiate a final agreement – a hard sell in a yearof fractious global politics and U.S. efforts to obstruct atransition away from fossil fuels. * In the decade since the landmark COP21 Paris agreement,both a lot and a little has changed when it comes to the energysector makeup and the trajectory of emissions. ROI globalenergy transition columnist Gavin Maguire provides 10 charts onthe past ten years. * China’s imports of major commodities were largely soft inOctober as high prices weighed on volumes, writes ROI Asiacommodities columnist Clyde Russell, with iron ore’s resiliencebucking the trend despite the steel sector showing signs ofpressure.
Chart of the day
Political movement to re-open the U.S. government comes as consumer surveys slumped to near 3-1/2-year lows and households across the political spectrum fretted about the fallout from the longest government shutdown in history.
Today’s events to watch
* U.S. Treasury sells $58 billion of 3-year notes
* U.S. corporate earnings: Occidental Petroleum, Paramount Skydance, Tyson Foods, Interpublic
* Brazil hosts the United Nations climate summit, COP30 in Belem
* German Finance Minister Lars Klingbeil interview with Die Zeit newspaper on government budget, plans for defence spending and compulsory military service
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(By Mike Dolan; Editing by Andrew Heavens)