US Senate vote to end shutdown delivers reprieve to investors worried about AI valuations
Stocks worldwide have risen sharply following a US Senate vote to advance a bill that would end the country's longest-ever government shutdown. The move provides a boost to investors who were growing unnerved by signs of weakness in the US economy and the sky-high valuations of firms involved in artificial intelligence. The funding package still requires final approval and the signature of the US President before government operations resume.
Stocks from the United States to Japan have risen sharply amid hopes that an end to the longest US government shutdown in history is imminent.
US lawmakers moved over the weekend to end a five-week impasse over government funding. This action provides a significant boost for investors unnerved by signs of growing weakness in the US economy and the sky-high valuations of companies involved in artificial intelligence (AI).
The US Senate voted to advance a bill that would fund government operations through the end of January after a group of centrist legislators broke with party leaders to join the opposing side. The funding package still needs to win final approval in the Senate and pass the US House of Representatives, after which it would go to the US President for signature—a process expected to take several days.
Global Market Reaction
Stock markets across the Asia Pacific region made large gains, while futures in the US also rose in advance of stock exchanges reopening.
-
South Korea’s benchmark KOSPI led the gains, rising about 3 percent.
-
Japan’s Nikkei 225 and Hong Kong’s Hang Seng also rose sharply, advancing about 1.3 percent and 1.5 percent, respectively.
-
Taiwan’s Taiex rose about 0.8 percent, while Australia’s ASX 200 gained about 0.75 percent.
-
Futures for the US’s benchmark S&P 500 and the tech-heavy Nasdaq-100 were also up significantly.
Economic and Valuation Concerns
The reprieve comes at a critical time, as investors are increasingly concerned that AI-linked stocks may be wildly overvalued. There are also worries that the nation’s sweeping tariffs could be doing more damage to the economy than has been captured in official data so far.
One major tech company, whose graphics processing units are integral to the development of AI, recently became the first company in history to reach a market valuation of $5 trillion. This milestone was achieved just a day after another tech giant surpassed $4 trillion in market value.
While the official jobs report has been suspended since August due to the government shutdown, several independent analyses have pointed to rising layoffs. One executive outplacement firm reported last week that layoffs surged 183 percent last month, making it the worst October for jobs since 2003. A separate analysis estimated that the economy shed thousands of jobs during the month.
