Beginning of the end of the shutdown leads to bounce in stocks, led by tech

💡 DMK Insight

The US shutdown’s impending resolution is shifting market sentiment, and here’s why that matters: European stocks are rallying, particularly in financial, industrial, and tech sectors, signaling a broader risk-on environment. This uptick could lead to increased capital flows into equities, impacting forex pairs like EUR/USD, which traders should monitor closely. If the US Congress finalizes a deal, expect volatility in US markets as well, especially around key economic indicators like job reports or inflation data. Traders might want to position for a potential breakout in these sectors, especially if they can hold above recent resistance levels. But here’s the flip side: if negotiations falter or if the shutdown extends, we could see a sharp reversal. The current bullish sentiment might be overextended, and a sudden shift could lead to rapid sell-offs. Keep an eye on the S&P 500 and its correlation with European indices; a divergence could signal a risk-off shift. Watch for any news updates that could sway sentiment in the coming days, particularly around the end of the week when markets often react to political developments.