European stocks rallied at the start of the new trading week as a late test vote in the Senate on Sunday raised expectations for a bipartisan deal to fund the government, lifting investor sentiment across regions.
US stock futures climbed, and European indices followed suit.
Germany’s DAX rose 1.5%, France’s CAC 40 gained 1.4% and London’s FTSE 100 advanced 0.8% at around 11:00 CET. The uptick reflected renewed optimism that the shutdown, which has hindered access to key economic data, could soon end, alleviating uncertainty for markets.
AJ Bell investment director Russ Mould said the Senate vote was an important first step, but that there were still hurdles to be cleared.
“A key impact on the markets of the impasse, beyond the hit to the wider economy, has been the lack of data as key releases on areas like the jobs market have been delayed,” Mould said.
He added that this “created a considerable dose of the uncertainty which markets famously hate, and it is also hampering the ability of the Federal Reserve to make informed decisions on interest rates.”
“In this context, it’s not a surprise to see investors react positively to signs of progress, with Asian shares higher, indices on the front foot in Europe and US futures pointing towards gains when Wall Street opens later.”
A respite for whiskey and spirits
Meanwhile, shares in beleaguered drinks giant Diageo soared 6.4% in early trade on news that former Tesco chief executive Dave Lewis was appointed to lead the company.
Diageo is one of the world’s biggest drinks groups and a heavyweight in the FTSE 100, with a stable of blue-chip brands such as Johnnie Walker, Guinness, Smirnoff, Tanqueray, Don Julio and Baileys sold in more than 180 countries
The company has struggled with falling drink consumption after the end of the COVID-19 pandemic, and an end to the government shutdown is positive for Diageo as the United States is its single largest market
Lewis, who is set to take over 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 a “significant hire and a pleasant surprise”.
He explained that investors “are clearly excited about Diageo’s prospects under Lewis. The stock is unloved after several years of disappointment, and the appointment of a highly respected CEO could be enough to win over many investors.” However, Lewis knows he will ultimately be judged on results, not hope.
A boost for dollar exchanges and gold
In terms of currencies, the dollar exchange rate remains steady, with the current euro exchange rate hovering at around $1.15, while the yen exchange rate went up slightly to $154.1 or by 0.5%.
The UK pound is slightly weaker against the dollar, going down by 0.1% to $1.315.
Gold is up about 1.8% at roughly €3,521 per troy ounce (about €113 per gram and €113,200 per kilogram). It is still sought out as a safe place to park money, even as shutdown worries ease.
AI and tech leaders are firmer in pre-market trading alongside the broader risk-on tone, and reports show Nvidia up by around 3.5%.
The move sits within a wider global relief rally as investors price a potential end to the shutdown.
In other developments, shares of Danish pharmaceutical giant Novo Nordisk rose by 2.3% by midday in Europe after the company announced a partnership with Indian drugmaker Emcure Pharmaceuticals to market its weight-loss treatment Wegovy under a new brand through an exclusive agreement.
Meanwhile, the company failed in its bid to acquire biotech firm Metsera. The biotech company based in New York, which develops promising drugs against obesity, said it would accept a revised offer from Pfizer of up to $10 billion (€8.65bn).