US stock futures are jumping on hopes for a deal on the shutdown

U.S. stock index futures jumped in early trading in Asia amid hopes for a deal to end the longest U.S. government shutdown.Contracts for the S&P 500 and Nasdaq 100 rose more than 0.5% after Senate Republican Leader John Thune said he plans to test support for a limited spending package on Sunday, although it is unclear whether Democrats will back the measure. Shares in Australia opened higher, while the rest of Asia is expected to make a cautious start as investors weigh continued pressure on technology stocks.

While hopes of a deal may provide some relief, markets remain tense after the sharp sell-off in technology stocks last week reignited concerns about over-inflated valuations. Asian tech stocks are particularly vulnerable, having outperformed US stocks this year on optimism about China’s AI progress. Adding to the caution is the lack of new data to help investors understand the health of the US economy.

“The next week will depend on whether the U.S. government can end the shutdown,” Kyle Rodda, a senior analyst at Capital.com, wrote in a note to clients. While Wall Street’s rally late Friday had dulled some of the negativity in the markets, “this move ultimately amounted to little more than putting lipstick on the proverbial pig.”

Chinese assets will be in focus on Monday after consumer prices unexpectedly rose 0.2% in October from a year earlier as holidays during the month boosted demand for travel, food and transport. Factory deflation also decreased.

Even if Sunday’s vote passes, it doesn’t necessarily mean the shutdown will end anytime soon. The Democrats in the House of Representatives should also support the plan, but their support was not assured. Many Democrats in both chambers have continued to demand a one-year extension of Obamacare subsidies for low-income Americans in exchange for agreeing to reopen the government. The S&P 500 rose 0.1% on Friday, recovering from an earlier test of the 50-day moving average, after US consumer confidence fell to the lowest in more than three years. Ten-year government bond yields rose slightly, while the dollar fell 0.2%. The dollar is likely to trade within a range for now, Commonwealth Bank of Australia strategists led by Joseph Capurso wrote in a note to clients. “Even if the shutdown ends this week, it will be some time before data is released again. Several FOMC members have indicated they are reluctant to cut rates further while key economic data remains unreleased.”

Elsewhere, Reserve Bank of Australia deputy governor Andrew Hauser is expected to reiterate the central bank’s concerns about inflationary pressures in a speech on Monday. The RBA’s cautious stance is likely to continue to support the Australian dollar, according to strategists.