Wall St recovers as US Senate move to end shutdown

Stocks on both sides of the Atlantic gained as investors welcomed US policymakers making headway into ending the 41-day federal government shutdown which has left the Federal Reserve flying without official data to guide its policy and grounded flights around the world’s biggest economy for a lack of air traffic controllers.

The tech-heavy Nasdaq Composite drove gains on Wall Street with the Magnificent 7 megacap stocks among the leaders as Nvidia and Tesla both advanced more than 4%, while local favourite Rocket Lab was on the green side of the ledger ahead of its quarterly earnings after the bell.

Pfizer dipped after winning the bidding war for weight-loss drug startup Metsara with a deal for as much as US$10 billion, trumping GLP-1 pioneer Novo Nordisk.

Meanwhile, Australian futures are pointing to a positive start to the day when ASX trading opens across the Tasman with the Commonwealth Bank of Australia due to provide an update today, while the kiwi dollar nudged higher ahead of the Reserve Bank of New Zealand’s quarterly survey of inflation expectations.

Relief rally

Stocks on Wall Street and in Europe carried on the rally that started in Asia after eight Democrat senators broke ranks to back a stopgap funding measure to reopen the US federal government and end the 41-day shutdown that’s disrupted services as varied as providing official economic data to staffing air traffic controllers at the nation’s airports.

“Risk sentiment was underpinned at the start of the trading week amid expectations for deal that would end the longest ever US government shutdown,” Bank of New Zealand senior interest rate strategist Stuart Ritson said in a note. “The Senate will need vote on the deal, which is not currently scheduled, then the House will need to pass the bill, before President Trump signs it into law.”

The UK’s FTSE 100 index gained 1.1%, with liquor company Diaego rallying on the appointment of a new chief executive, while Germany’s DAX 30 advanced 1.1% and France’s CAC 40 climbed 1.4%.

Tech companies drove gains on Wall Street with all of the Magnificent 7 megacap stocks on the green side of the ledger, with Nvidia up 4.5% in late trading, while Tesla gained 4% and Google-parent Alphabet rose 3.5%. The Nasdaq advanced 2%, while the S&P 500 increased 1.3%.

Sharesies’ favourite Rocket Lab was up 0.7% ahead of reporting its quarterly earnings once the close of trading.

Upping the ante

Pfizer slipped 0.7% after winning a bidding war for weight-loss drug startup Metsera, which sank 15%, agreeing to pay up to US$10 billion if certain targets are hit. It initially offered US$7.3 billion in September before Denmark’s Novo Nordisk made a rival bid that was ultimately unsuccessful.

Canadian miner Barrick Mining rallied after lifting its share buyback programme and hiking its quarterly dividend, while gold futures were up 2.4% at US$4,108 an ounce at 7am in Auckland.

The positive tone is expected to continue into the antipodes, with Australian futures pointing to a 0.4% gain for the S&P/ASX 200 index when trading opens across the Tasman, while the kiwi dollar rose to 56.46 US cents at 7am in Auckland from 56.27 cents yesterday.

Commonwealth Bank of Australia is due to provide its quarterly update today, with the other three major lenders having reported their annual results over the past week highlighting the increased level of competition across the Tasman.

Meanwhile, the Reserve Bank of New Zealand’s quarterly survey of inflation expectations is the only major piece of local data, with the two-year ahead gauge in check in the prior quarter.

And The Australian newspaper's DataRoom column is reporting Macquarie Capital has won the mandate to sell KKR's New Zealand bus business, Ritchies Transport .

Reporting by Paul McBeth. Image from Tomasz Zielonka on Unsplash.