Shares are set to open at a two-week high after news of a deal to temporarily raise the US debt ceiling and re-open the federal government fuelled a relief rally on Wall Street.
The December SPI 200 futures contract advanced 20 points or 0.4 to 5272 ahead of Congressional votes this morning on a bipartisan agreement a day ahead of the Treasury's deadline to avert a default.
The S&P 500 rallied 24 points or 1.41% to finish just three points from its mid-September all-time closing high as House Republicans indicated they would not stand in the way of the Senate deal, likely ensuring its success. The Dow surged 206 points or 1.36% and the Nasdaq added 1.19% to reach its highest level since 2000.
"Investors are relieved that it looks like we're not going to go over the cliff," Ben Hart, research analyst at Haverford Trust in the US, told Bloomberg. "It takes the worst-case scenario off the table."
Democrat Senate Majority Leader Harry Reid and Republican Minority Leader Mitch McConnell announced an agreement to re-open and fund the federal government until January 15 and raise the borrowing limit until February 7. Voting on the bill is likely to take place around mid-morning AEST. Republican House leader John Boehner said he expected the government to re-open tonight.
The Federal Reserve's "Beige Book" noted slower growth in parts of the country over the last month but limited impact from the government shutdown. A separate report had confidence among builders at its lowest level in four months this month. Read more here.
All 10 industry groups advanced on the S&P 500 as the political clouds lifted. The advance continued a trend towards broad gains on the market - 443 companies on the S&P 500 have advanced this year, the most in the 23 years since Bloomberg began compiling data. The VIX, Wall Street's "anxiety gauge", slumped 20% overnight for its biggest decline of the year.
Australia's big miners consolidated several days of steady gains. BHP edged up 0.54% and Rio Tinto closed dead flat. Spot iron ore for import to China advanced 10 cents to US$133.70 per dry metric tonne.
Oil regained US$102 a barrel ahead of the weekly US inventory report. West Texas Intermediate crude oil for November delivery was lately up $1.03 or 1% at US$102.24 a barrel.
Precious metals enjoyed modest rebounds. Gold for December delivery was recently ahead $6.50 or 0.5% at US$1,279.70 an ounce. December silver put on 10 cents or 0.5% at US$21.29 an ounce.
A mixed night on the London Metal Exchange saw copper edge higher on hopes of a Washington deal. Copper added 0.3%, aluminium 0.4%, lead 1% and nickel 0.9%. Tin slipped 0.3%, zinc 0.1%. US copper for December delivery was recently unchanged at US$3.31 a pound.
The Stoxx Europe 600 index advanced 0.23% to its highest level since June 2008 as news a likely deal in Washington broke. Germany's DAX put on 0.47%, France's CAC lost 0.28% and Britain's FTSE gained 0.35%.
TRADING THEMES TODAY
VOTES TO SET TONE: Washington looks set to kick the can down the road for a few months, offering world markets some breathing space until after Christmas. A vote is expected to take place in the Senate this morning at around 11-12am EST, with a vote in the House possibly to follow. Success there would clear the way for the bill to go to the White House. The signs are that the Congressional votes will be a formality, but success may give the ASX a lift - our futures this morning couldn't be accused of over-exuberance.
ECONOMIC NEWS: Quarterly business confidence figures are due at 11.30am EST. Europe releases current account data tonight. Away from Washington, tonight's US highlights include weekly jobless claims, the Philly Fed Manufacturing Index and speeches from two Federal Reserve officials.
