European stocks rebounded at the start of the new trading week as a late test vote in the Senate on Sunday raised hopes for a bipartisan deal on government funding, boosting investor sentiment across the region.
US stock futures rose, and European indexes followed suit.
As of around 11am CET, Germany’s DAX was up 1.5%, France’s CAC40 index was up 1.4% and London’s FTSE 100 index was up 0.8%. The gains reflect renewed optimism that the government shutdown that has hampered access to key economic indicators will soon end, reducing market uncertainty.
Russ Mold, investment director at AJ Bell, said the Senate vote is an important first step, but there are still hurdles to clear.
“Beyond the damage to the broader economy, a major contributing factor to the stalled market is the lack of data due to delays in key announcements on areas such as the job market,” Mold said.
He added that this “increases considerably the uncertainty that markets are famous for and also hampers the Fed’s ability to make informed decisions about interest rates.”
βIn this context, it is not surprising that investors react positively to signs of progress, with Asian stocks rising, indexes leading in Europe, and US futures pointing higher as Wall Street opens late.β
Take a break with whiskey and spirits
Meanwhile, shares in struggling drinks giant Diageo jumped 6.4% in early trade following news that former Tesco chief executive Dave Lewis has been appointed to head the company.
Diageo is one of the world’s largest drinks groups and a leading FTSE 100 company with premium brands such as Johnnie Walker, Guinness, Smirnoff, Tanqueray, Don Julio and Baileys, sold in more than 180 countries.
The end of the government shutdown is a positive for Diageo, as the US is its largest market, although the company is struggling with a decline in beverage consumption after the end of the coronavirus pandemic.
Lewis, who is scheduled to take up the role in January 2026, was known as “Drastic Dave” for his role in turning around the supermarket chain.
Dan Coatsworth, head of markets at AJ Bell, said the appointment was “an important hire and a pleasant surprise”.
He explained that investors are “clearly excited about Diageo’s prospects under Mr Lewis. The share price is out of love after several years of disappointment, but the appointment of a highly respected CEO could be enough to attract many investors.” But Lewis knows that in the end he will be judged on results, not hopes.
Dollar exchange and gold push up
Regarding currencies, the dollar exchange rate remained steady, with the euro exchange rate hovering around $1.15, while the yen exchange rate rose slightly to $154.1 (0.5%).
The British pound fell slightly against the dollar, down 0.1% to $1.315.
Gold rose about 1.8% to about 3,521 euros per troy ounce (about 113 euros per gram and 113,200 euros per kilogram). Even as fears of closures ease, they remain sought after as a safe place to store funds.
AI and technology leaders were firmer in pre-market trading with broad risk-on undertones, with Nvidia up about 3.5%, according to the report.
The move comes as part of a broader global relief rally as investors price in the possibility of an end to the government shutdown.
In other developments, shares in Danish drug giant Novo Nordisk rose 2.3% by midday in Europe after the company announced a partnership with Indian drugmaker Emcure Pharmaceuticals to sell its weight loss treatment Wegoby under a new brand through an exclusive agreement.
Meanwhile, the company failed in its bid to acquire biotech company Metsala. The New York-based biotechnology company, which is developing promising drugs against obesity, said it would accept a revised offer of up to $10 billion (β¬8.65 billion) from Pfizer.