US stocks chalked up their biggest daily gain of the month in the wake of an in principle deal that would keep the government open and avoid a repeat of the shutdown that gripped the country through the start of 2019.

Democrats and Republicans reached a tentative agreement late Monday ahead of a Friday deadline and should keep government services funded. Although President Donald Trump said he was not thrilled with the compromise that granted his plan to build a wall along the US-Mexico border less than a quarter of the funding he asked for, he soothed nerves saying “I don’t think you’re going to see a shutdown” of the government.

With investors in an upbeat mood, US Treasuries sold off, while the US dollar’s lengthy eight-session losing streak looked to be at an end.

The S&P 500 finished 1.3 per cent higher and for a third consecutive session. It was the biggest one-day gain for the benchmark since January 30 and left the index at its highest since December 3.

All sectors finished higher, with basic materials up 2.3 per cent, technology 1.6 per cent higher and industrials advancing 1.5 per cent. Those sectors were also boosted by optimism this week that the US and China would agree on trade deal before a March 1 deadline that would see tariffs on Chinese imports ratcheted higher.

Utilities, communications services and consumer staples were the bottom-performing sectors, all with advances of less than 1 per cent.

The Dow Jones Industrial Average gained 1.5 per cent, helped by its weighting towards big, global industrial companies that are deemed to benefit from a resolution to the trade war. The Nasdaq Composite added 1.5 per cent.

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The dollar retreated for the first time in nine sessions, dragging it back from a two-month high. The DXY index, which tracks the buck against a basket of global peers, was down 0.4 per cent at 96.705, its largest one-day drop since January 30.

Treasuries sold off as yields moved higher. The yield on the benchmark 10-year Treasury rose 2.1 basis points to 2.6823 per cent, while that on the two-year rose 1.4 bps to 2.5038 per cent.



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