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Global markets rally as US shutdown ends

Markets welcomed the resolution of the longest US government shutdown, with US and European equities advancing on Wednesday as investors anticipated a period of stability following the agreement. The Dow Jones set a new record high, while Asian equities were mixed, weighed down by tech sector weakness and cautious sentiment amid ongoing questions about AI-driven valuations. Gold rose above USD 4200 per ounce, and Swiss negotiators were headed to Washington for pivotal tariff talks. 

  • Date
  • Author Shane Strowmatt, Senior Investment Writer
  • Reading time 5 minutes

Strategist US Capitol
© Shutterstock

The longest government shutdown in US history officially concluded late Wednesday after the House passed a funding bill, which President Donald Trump promptly signed into law. The deal ensures back pay for federal employees, funds several agencies through January and restores key support programmes such as food assistance, although delayed economic data releases - including October’s jobs and inflation figures - are expected to be permanently disrupted. Transport services, particularly air travel, are likely to need weeks to return to normal following widespread disruptions and thousands of cancelled flights. The shutdown, which lasted 43 days, is estimated to leave the US economy USD 11 billion smaller by the end of 2026 than it otherwise would have been.

Asia stocks mixed as investors exit tech

Asian equities were mixed on Thursday, held back by technology-heavy markets, as investors rotated away from the sector amid scepticism of high valuations driven by artificial intelligence optimism. Japan’s Nikkei 225 was trading 0.4% higher, while Korea’s Kospi advanced 0.6%. Hong Kong’s Hang Seng Index slipped 0.2%, but mainland China’s CSI 300 outperformed, gaining 1%. Australia’s S&P/ASX 200 was down 0.5% despite stronger-than-expected employment data, which dampened expectations of imminent rate cuts by the central bank.

Dow Jones hits record high

The Dow Jones Industrial Average climbed 0.7% to a record 48,254.82 points on Wednesday, outperforming other major US indices in light of the imminent end to the government shutdown. While the S&P 500 posted a 0.1% gain, the Nasdaq 100 slipped 0.1%, reflecting investor caution about elevated valuations in artificial intelligence-linked technology stocks. Chipmaker AMD surged 9% after forecasting accelerated revenue growth.

Gold rises above USD 4200

Gold prices increased above USD 4210 per ounce in Asian trading on Thursday, extending recent gains as persistent economic uncertainty followed the end of the US government shutdown. Although hopes of a Federal Reserve rate cut in December have diminished, sustained demand from central banks, particularly in China, continues to support the price of gold. Market attention remains on the likely weak US economic data resulting from the prolonged shutdown, while other precious metals such as silver and platinum also advanced.

Swiss tariff talks enter crucial phase

Swiss Economy Minister Guy Parmelin travelled to Washington on Thursday for key negotiations with US Trade Representative Jamieson Greer aimed at reducing US import tariffs on Swiss goods from the current rate of 39% imposed in August. Media reports suggested an agreement to lower tariffs to 15% may be reached in the coming weeks, pending final approval from US President Donald Trump. Such a reduction would significantly benefit Swiss exporters in sectors including machinery, watches, and food. The Swiss government remains optimistic about reaching a deal, describing recent discussions as constructive. The Swiss Market Index rose 0.8% on Wednesday.

German inflation eases to 2.3%

The inflation rate in Germany, as measured by the consumer price index, stood at 2.3% year-on-year in October, slightly down from 2.4% in September and 2.2% in August, according to figures released on Wednesday. Elevated prices for services continued to drive inflation, while energy product prices declined by 0.9% compared to October of last year, and food price increases slowed to 1.3%. Core inflation, excluding energy and food, remained unchanged at 2.8%, indicating persistent cost pressures in other sectors. European equities finished firmly higher on Wednesday. The Euro Stoxx 50 surged 1.2%, Germany’s DAX climbed 1.2%, and France’s CAC 40 added 1% as investors responded positively to developments in the US and prospects of economic relief following the end of the government shutdown.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from Alibaba, Applied Materials, Deutsche Telekom, Siemens, Tencent, and Walt Disney.

Economic data in focus: French unemployment rate (07:30), UK gross domestic product (08:00), UK trade balance (08:00), UK manufacturing production (08:00), Swiss Producer and Import Price Index (08:30), euro-area industrial production (11:00), US Consumer Price Index (14:30), and US weekly initial jobless claims (14:30).

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Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.