Share markets reversed early weakness after the Democrats in the US announced a deal with their political opponents to lift the debt ceiling and provide funding for government purposes until December 15. A surprise rate hike from the Bank of Canada appeared to lift investor confidence. Rallies in industrial commodities also point to increased market optimism.

The deal struck by US politicians looks weak. It’s a short term fix that buys a short amount of time but will result in increased pressure on the government as the new deadline of December 15 looms. However investors responded to the reduction in short term uncertainty.

The Bank of Canada lifted cash rates to 1%, citing a stronger economy. Last week’s GDP data showed an annual growth rate of 4.5%, well above estimates around 3.7%.  The Canadian dollar starred in currency trading, hitting two year highs against the US dollar.

Futures markets are pointing to opening gains across the Asia Pacific region today. Trading volumes may decline ahead of Australian retail sales and a read on the Japanese leading index due today. Gains for iron ore, copper and oil could see resource stocks extend their recent rallies.