European Markets Rally as U.S. Government Shutdown Hopes Boost Investor Confidence
European markets opened sharply higher on Monday, driven by growing optimism that a U.S. government shutdown could soon end. The pan-European Stoxx 600 rose 1.5% by midday, with most sectors seeing gains as investors welcomed signs of stability in Washington. Major indexes across the continent followed suit, with the U.K.’s FTSE climbing nearly 1%, Germany’s DAX up 1.5%, France’s CAC 40 advancing 1.9%, and Italy’s FTSE MIB gaining 2.1%.
The market optimism came after U.S. Senate lawmakers took a crucial step toward a bipartisan deal aimed at reopening the federal government in January and reversing recent mass federal layoffs. Reports indicate that enough Democratic senators are poised to support the deal, surpassing the 60-vote threshold needed to move forward. Consumer sentiment in the U.S. has recently fallen to a three-year low due to shutdown concerns, resolving a welcome sign for global investors.
In Europe, technology and financial stocks were among the strongest performers. The Stoxx 600 Technology Index rose 2.3%, while the Stoxx 600 Banks Index jumped 2.5%. Diageo led individual stock gains, surging 7.2% after announcing Dave Lewis as its new CEO, following a recent cut to the company’s full-year guidance that reflected challenges in the U.S. and China markets. Pharma stocks also performed strongly, with Novo Nordisk up 2.4% on a new partnership with Indian drugmaker Emcure Pharmaceuticals, while Sweden’s Camurus soared 12.9% after positive trial results for its obesity treatment.
Across the Atlantic, U.S. stock futures also rose Sunday night, reflecting investor relief at the potential government deal. Last week’s market volatility was largely driven by concerns over high valuations in artificial intelligence-related stocks. Meanwhile, Asia-Pacific markets traded higher overnight, shrugging off tech-driven losses from the previous week and responding to higher-than-expected inflation data from China for October.
Investors are now watching key corporate earnings from Hannover Re and MedioBanca, as well as the COP30 climate summit kicking off this week. With global markets reacting positively to the potential U.S. resolution, analysts say momentum may continue, particularly in sectors sensitive to policy and consumer confidence.
source: cnbc