Morning Bid: Markets rejoice potential end to US government shutdown

A look at the day ahead in European and global markets from Rae Wee

Global markets are set to begin the week with an oomph as investors cheer the prospect of an imminent end to a historic U.S. government shutdown that has upended everything from air travel to key economic data releases.

In a procedural vote, the U.S. Senate on Sunday advanced a House-passed bill that will be amended to fund the government until January 30 and include a package of three full-year appropriations bills.

If the Senate eventually passes the amended bill, the package still must be approved by the House of Representatives and sent to President Donald Trump for his signature, a process that could take several days.

Nonetheless, the positive stride was enough to send Nasdaq futures up 1.2% and S&P 500 futures up 0.7% in Asia, with European futures also clocking strong gains.

Asia stocks were upbeat, while U.S. Treasury yields and the dollar rose.

The shutdown has taken a growing toll on the U.S. economy, with federal workers from airports to law enforcement and the military going unpaid while the Federal Reserve flies virtually blind with limited government reporting of economic data.

White House economic adviser Kevin Hassett said in an interview that the U.S. economy could contract in the fourth quarter if the shutdown drags on.

Data on Friday also showed U.S. consumer sentiment weakened to the lowest level in nearly 3-1/2 years in early November amid worries about the economic fallout of the shutdown.

The latest developments offered a much-needed lift to stock markets after a turbulent few sessions last week on nerves over elevated valuations of artificial intelligence and technology stocks - sectors that have powered the market this year.

Still, many investors viewed the pullback as a breather rather than a sign of deeper trouble.

On the policy front in Asia, minutes of the Bank of Japan's October meeting showed on Monday that policymakers saw a growing case to raise interest rates in the near term.

The discussions heighten the chance the BOJ could hike rates next month or in January, with the timing dependent on whether earnings and comments from executives give policymakers enough conviction that firms will keep increasing pay next year.

In China, the CSI300 blue-chip index was down 0.24%, while Hong Kong's Hang Seng Index rose 0.6%.

Producer price deflation in the world's no. 2 economy eased in October and consumer prices returned to positive territory, data showed on Sunday, as Beijing steps up efforts to curb over-capacity and cut-throat competition among firms.

Key developments that could influence markets on Monday:

- France: Reopening of 3-month, 6-month, 9-month and 1-year government debt auctions

- Germany: Reopening of 3-month and 9-month government debt auctions

(Editing by Shri Navaratnam)