Global markets rally on news of U.S. debt deal

World markets rallied in relief Monday on news that Washington had reached a last-minute deal to raise the debt ceiling and avoid defaulting on its bills.

The agreement on the debt limit still faces approval by the U.S. House of Representatives and Senate. Congress is preparing to vote on the deal, with a vote expected in the Senate at around 2 p.m. Monday local time.

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European and Asian financial markets rallied early Monday, The New York Times reports, setting a tone for a stronger opening on Wall Street.

The Euro Stoxx Europe 600 Index rose 0.7 percent in London by Monday afternoon and the FTSE 100 added 1.4 percent, while the benchmark Standard & Poor’s 500 futures contract rallied 1 percent, according to the Times. Germany's DAX index was up 0.5 per cent.

Japan’s in Nikkei 225 index rose 1.3 percent in overnight trading, while in Hong Kong the Hang Seng added 1 percent.

On Wall Street, stocks rose more than 1 percent after the opening bell, following on a sharp rise in U.S. stock index futures ahead of markets opening, Reuters reports.

Forbes described the rally “as a form of relief from possible Armageddon.”

But while a U.S. default is looking less likely, MarketWatch warns the debt deal may not be enough for the major ratings firms — including Standard & Poor’s Ratings Service, Moody’s Investors Service and Fitch Ratings — to avoid downgrading the country's AAA rating.

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