Market rallies on Republican debt ceiling olive branch

The S&P 500 and FTSE Eurofirst both made gains on Thursday afternoon as investors became hopeful that the government was reaching a resolution on the US shutdown.

Republican house speaker John Boehner has proposed to members that the country’s borrowing be raised for six weeks so that the two parties can focus on resolving the budget, without having to worry about the more immediate risk of a sovereign default.

“I am hoping (President Obama) would look at this as a good faith measure to move half way so that a conversation can begin,” Mr Boehner said.

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The US government has been on partial shutdown since October 1, as the Republicans refused to agree President Obama’s budget unless healthcare reforms were delayed.

This meant that all “non essential” staff have been temporarily laid off, while if the parties fail to agree on the amount the government can borrow by October 17, the US may have to default on its debts.