Markets breathe a sigh of relief with an end to the government shutdown in sight

Stock futures rose early Monday on hopes that the longest federal government shutdown in American history will come to an end soon.

The Senate voted to advance legislation to end the deadlock after a group of Democrats broke ranks to back a deal. The bill would allow federal funding to restart and end the furlough of many employees, but it does not contain a guarantee to extend healthcare tax subsidies, a key Democratic demand.

“It looks like we’re getting closer to the shutdown ending,” President Donald Trump said Sunday night. “You’ll know very soon.”

Markets breathed a sigh of relief. S&P5 00 futures were up as much as almost 1% early Monday, the Dow Jones Industrial Average and the Nasdaq were also rising. The rally extended to global stock indexes, with the Nikkei 225 in Japan rising 1.3% and Britain’s FTSE 100 surging 1%.

Jonathan Pingle, chief U.S. economist at UBS Investment Bank, told CNBC: “The Fed’s been stumbling around in this fog and I think markets would like some clarity one way or another.”

He called the shutdown “huge inconvenience” and a “drag on growth.”

“There’s a certain amount of cheerleading growing on,” Pingle said of the Senate bill. “Businesses are going to be happy having a functioning government and getting past reports.”

Lawmakers voted 60-40 to advance the bill Sunday night before the Senate adjourned until Monday. The Republican-controlled House also needs to back the measure before it heads for Trump’s desk for approval. That could yet take several days.

"A possible end to the longest running U.S. shutdown is a positive for markets," said Prashant Newnaha, senior Asia-Pacific rates strategist at TD Securities, per Reuters. "Our expectation is that the next step is for a House vote on Wednesday, with the government set to reopen this Friday."

At 40 days, the current shutdown is the longest ever in the U.S., and until this weekend Republicans and Democrats had been at an impasse. It has left 1.4 million federal employees without pay.

It has also stopped key economic data releases. The shutdown effectively closed the Bureau of Labor Statistics and kneecapped its ability to collect and produce timely data about the state of the U.S. economy.

Russ Mould, investment director at AJ Bell, said the lack of data “has 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.”

—Joseph Zeballos-Roig contributed to this article.