Congressional negotiators reached a bipartisan budget compromise on Tuesday that would prevent another government shutdown, if approved by the House and Senate. The deal would set spending levels, reduce the deficit and relieve some of the arbitrary, forced spending cuts.
The reduced risk of a damaging shutdown would give support to those arguing for the Fed to begin trimming its $85-billion a month bond purchases as early as next week.
"They could well be helped in this decision by last night's announcement... that a new budget deal could well be unveiled in the coming days," noted Michael Hewson, chief market analyst at CMC Markets UK.
"It certainly does appear that a window of opportunity could be opening up for the Fed to act next week without a sharp market reaction, the only question remaining as to whether they will avail themselves of it."
Asian markets ended weaker, with Hong Kong's Hang Seng Index dropping 1.7% and China's Shanghai Composite falling 1.5%, as heavy pollution blanketed the region. Tokyo's benchmark Nikkei 225 closed 0.6% lower and Australia's ASX All Ordinaries finished the day down 0.7%.
General Motors(GM) said Wednesday it was ending production of its iconic Holden model in Australia, casting doubt on the future of the country's struggling auto industry.