US shares off highs, but still up strongly

The US stock market has rallied on relief that a default crisis looks likely to be averted.

The Dow spiked earlier today after details finally emerged of a compromise deal between Senate leaders to end the government shutdown and raise the debt ceiling.

Financial shares advanced the most, with Bank of America and Wells Fargo gaining more than 2%, while Citigroup and JP Morgan both rose over 3%.

With under an hour to the close of share trading in New York, the main stock index benchmarks had pared their gains, but remained well into positive territory. The Dow and S&P 500 were both up around 1.1%, while the NASDAQ 100 rose just under 1%.

President Obama has indicated his approval of the bi-partisan deal, which reportedly should garner enough votes in the House of Representatives to pass, thus paving the way for the US federal government to reopen once more and forestall a default that would have posed grave risks to the global recovery.

The Fed’s Beige Book was released today and reported the US economy continues to grow at a ‘modest to moderate’ pace since the last report, although the rate of expansion slowed in four of the federal districts. Improvement in the job market was characterised as modest. Inflation remains subdued according to the report.

Given the economic softness described by the Beige Book, along with the general scarcity of economic data over the last few weeks plus the potential impact of the shutdown, it would appear a taper is off the table for the next FOMC meeting.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen. 79% van de retailbeleggers lijdt verlies op de handel in CFD’s met deze aanbieder.
Het is belangrijk dat u goed begrijpt hoe CFD's werken en dat u nagaat of u zich het hoge risico op verlies kunt permitteren.
CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen.