Asian Markets Respond Positively to US Shutdown Resolution
Financial markets across Asia experienced upward momentum for the second consecutive day on Tuesday as United States lawmakers moved closer to ending the longest government shutdown in the country's history. The positive trend emerged despite ongoing concerns about potential bubbles in the technology sector fueled by artificial intelligence investments.
Breakthrough in Washington After 41-Day Standoff
The political deadlock in Washington, which entered its 41st day on Monday, showed signs of resolution after senators passed a compromise budget measure. A group of Democrats broke with their party to support Republican-backed legislation that would fund government departments through January. The bill now awaits approval in the Republican-controlled House of Representatives before potentially reaching President Donald Trump's desk, with some officials suggesting the government could reopen by Friday.
House Speaker Mike Johnson expressed relief to reporters on Monday, stating: "It appears to us this morning that our long national nightmare is finally coming to an end, and we're grateful for that." President Trump echoed this sentiment from the Oval Office, confirming "we'll be opening up our country very quickly" and describing the agreement as "very good."
Economic Impact and Market Reactions
Investors welcomed the developments after growing increasingly concerned about the shutdown's severe consequences, including disruptions to food benefits for low-income households and potential air travel chaos during the upcoming Thanksgiving holiday. The extended closure had also prevented the release of crucial official data on inflation and employment, forcing traders to rely on private reports for economic insights.
Fiona Cincotta, senior market analyst at City Index, noted in her commentary: "Reopening would not only boost sentiment, but also open the way for data releases, which could provide more insight into the health of the US jobs market and, more broadly, the US economy ahead of next month's Federal Reserve interest-rate decision."
Michael Brown from Pepperstone highlighted the economic damage, explaining that "every week of a shutdown subtracts around 0.1 percentage point from US GDP growth in the quarter in question." He warned that the recent impact might be larger due to factors like increasing air traffic delays, but suggested that reopening would allow markets to refocus on the underlying economy's strength.
Most Asian markets built on Monday's gains, with Tokyo's Nikkei 225 rising 0.4% to 51,131.28 and Hong Kong's Hang Seng Index climbing 0.1% to 26,680.73. The positive performance followed a Wall Street rally driven by technology giants including Amazon and Nvidia, despite recent concerns about overvaluation in the AI investment sector.
