Market relief as last minute deal averts US default

The US Republican party has reluctantly helped pass a bill that will temporarily lift the debt ceiling, meaning government employees can return to work and the country has avoided a default.

On Thursday global equity markets reacted positively to the news, with the FTSE All-World index rising 0.3 per cent to 257.4, while the Nikkei 225 and the Hang Seng also made gains.

The resolution which has ended the US shutdown for the time being passed with a majority in the senate of 81 to 18 and through the house with 285 votes compared to 144.

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The move means the debt ceiling will be postponed until February 7, and reopens government until January 15, meaning that the thousands of workers temporarily laid off during the closure can return to their jobs on Thursday morning.

The main sticking point for the Republicans is Democrat president Barack Obama’s healthcare bill, and under the terms of the deal, the the two parties must resolve negotiations to reduce the budget deficit by December 13.