S&P 500 rises as the Senate passes a week-long interim appeal to avoid the shutdown of the US government.

• The S&P 500 rallied to session highs after the Senate voted to avoid a US government shutdown.
• The index is still trading in the red, however, amid grim Brexit negotiations and US fiscal stimulus.

The S&P 500 Cash Index rallied to update session highs just below 3,660 in recent trading after the US Senate voted to pass a week-long interim bill temporarily preventing a US government shutdown. at midnight on Friday. The week-long interim bill allows Republican and Democratic negotiators to continue discussions on an overhead bill that would continue government funding and provide further assistance to Covid-19. However, there is already talk that one week might not be enough and that Congress may need to pass another interim one-week bill and that negotiations could even continue after Christmas.

Although the S&P 500 is now trading more than 20 points above its session lows at 3630, the index is still trading in the red on the day at about 0.3% or 13 points. S&P 500 futures saw a slide during the hours leading up to the United States along with European stocks during the early part of the European session on Friday.

Negotiation deadlock

Market commentators and traders cite the continued stagnation in Brexit and the US fiscal stimulus talks as two factors weighing on sentiment on the last trading day of the week.

In the former, the EU and the UK remain a long way from agreement given disagreements over agreements on fisheries, governance and level playing field requirements. British Prime Minister Boris Johnson and EU Commission Chairman von der Leyen met earlier in the week and failed to close the gap, but told negotiators to continue talks until Sunday which will make a firm decision about the future of the talks. With officials on both sides of the English Channel sounding increasingly pessimistic about the chances of a deal, markets have started to weigh the likelihood of the UK exiting the EU single market by the end of the year.

On the US fiscal stimulus talks, negotiations are ongoing, but still stalled. Republicans and Democrats seem to have gotten much closer in agreement regarding the size of the overall package, but key points remain; Democrats want aid money for states and cities, something Republicans oppose, while Republicans want corporate liability protections, something Democrats oppose. Senate Leader Mitch McConnell has proposed passing a package that only addresses the area on which both parties agree, but without success. Meanwhile, bipartisan negotiators appear to have made decent progress, although there is no indication that the majority of Senate Republicans and House Democrats are willing to support whatever has occurred to them.