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Asian stocks and gold surged as optimism grew over a potential U.S. government shutdown deal. Investors reacted positively, though analysts urge caution.

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A Wave of Relief Sweeps Asian Markets

Asian equities climbed on Tuesday, buoyed by growing optimism that Washington is nearing a resolution to the prolonged U.S. government shutdown. The surge followed a strong rebound in gold and tech-heavy Nasdaq futures, signaling renewed investor confidence across global markets.

Signs of a Deal in Washington

After weeks of gridlock, U.S. lawmakers made progress toward ending the nation’s longest-ever government shutdown. A bipartisan funding proposal passed an initial Senate hurdle late Sunday, with only a few procedural steps remaining before final approval by the House of Representatives and President Donald Trump’s signature.

The news lifted market sentiment across Asia and the United States, as traders bet that government operations could resume by week’s end. Online prediction platform Polymarket reflected this optimism, showing near-total confidence that the government would reopen soon, a sentiment that helped push markets higher.

Stocks and Gold Surge

Gold prices leapt nearly 3% overnight, reaching above $4,100 in Asian trading, its highest level in months, while the Nasdaq Composite Index (.IXIC) gained 2.3%, clawing back last week’s AI-related losses.

Regional stock benchmarks followed suit:

• South Korea’s Kospi (.KS11) surged 2.1%,

• Japan’s Nikkei (.N225) climbed 0.7%, and

• Hong Kong’s Hang Seng (.HSI) and China’s Shanghai Composite (.SSEC) both opened higher.

Meanwhile, S&P 500 futures edged up 0.1%, extending Wall Street’s strong rebound. On Monday, the S&P 500 (.SPX) closed 1.54% higher, its sharpest daily gain since mid-October, while the Nasdaq notched its biggest one-day jump since May.

Expert Insight: “Too Early to Celebrate”

While investors breathed a collective sigh of relief, some analysts cautioned against premature optimism.

“Markets have clearly reacted with relief, but it’s too early to pop the champagne,” said Vasu Menon, Managing Director for Investment Strategy at OCBC Bank in Singapore. Menon noted that the reopening of the U.S. government would allow the resumption of key economic data releases, information that could pave the way for future interest rate adjustments by the Federal Reserve.

He added that renewed access to official data is also bolstering gold’s appeal as traders anticipate potential rate cuts later in the year.

Currency and Bond Moves: Yen Weakens, Treasuries Steady

The mood for risk-taking rippled through currency markets as safe-haven assets retreated. The Japanese yen slid to ¥154.49 per dollar, its weakest level since February, reflecting reduced demand for safety.

U.S. Treasury yields initially rose, with 10-year yields touching 4.147% before settling at 4.11%. However, the bond market paused for Veterans Day on Tuesday.

According to Jack Chambers, Senior Rates Strategist at ANZ Bank in Sydney, the short-term reaction in bond markets is likely to be muted.

“We don’t expect reopening the government to spark a lasting sell-off in rates,” Chambers explained. “Markets had already priced in expectations that the shutdown would end relatively soon.”

Investor Sentiment: Confidence Returns-Cautiously

Despite the positive momentum, traders remain wary of potential delays in finalizing the deal. A single setback in the Senate or House could briefly dent confidence, given how tightly markets have priced in a swift resolution.

Still, risk appetite is improving. The recent rally reflects investor belief that the U.S. economy can resume its normal course, especially if fiscal disruptions end and the Federal Reserve signals flexibility on future policy moves.

Gold’s strong performance also underscores continued demand for hedges against uncertainty, even as equities rebound.

A Fragile Optimism

If Congress finalizes the deal this week, analysts expect further gains in Asian equities and U.S. futures. However, markets are also watching how swiftly government agencies can restart data reporting, as missing economic indicators have complicated monetary policy forecasting.

The coming weeks will likely see renewed focus on inflation, employment, and interest rate expectations, key metrics that could define market direction into year’s end.

As OCBC’s Menon put it, “A government reopening removes one cloud from the horizon, but many others remain.”

Hope Returns, but Volatility Lingers

Tuesday’s rally highlights a renewed sense of optimism across global markets, but it’s tempered by the understanding that political and economic uncertainties persist. Investors may enjoy the calm after weeks of tension, yet analysts warn that the real test will come once the shutdown officially ends and fresh economic data start to flow again.

For now, the world’s financial pulse beats a little steadier, but the champagne remains on ice.

(Disclaimer:  This article is for informational purposes only and is based on verified market data and expert commentary. It does not constitute financial advice. Readers should consult professional analysts before making investment decisions.)

 

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