Equity markets rose ahead of a crucial meeting between US President Joe Biden and Republican House Speaker Kevin McCarthy to iron out road blocks in debt-ceiling negotiations.
(Bloomberg) — Equity markets rose ahead of a crucial meeting between US President Joe Biden and Republican House Speaker Kevin McCarthy to iron out road blocks in debt-ceiling negotiations.
The S&P 500 gained, led by communication stocks, while the tech-heavy Nasdaq 100 was also higher. Chipmakers were under pressure and Micron Technology Inc. sank 4.4% after China said the company’s products failed a cybersecurity review. Facebook owner Meta Platforms Inc. edge higher after being hit with a record €1.2 billion ($1.3 billion) European Union privacy fine.
Treasury yields crept higher, reversing earlier declines as St. Louis Fed President James Bullard said he’s thinking of two more rate hikes this year.
The big question for investors remains whether US politicians will be able to reach a deal to raise the debt limit before the government runs out of money. The urgency of the situation was underscored on Sunday by Treasury Secretary Janet Yellen, who said the chances are “quite low” that the US can pay all its bills by mid-June.
“There is a lot of showmanship around the debt ceiling,” said Sarah Hewin, senior economist at Standard Chartered Plc in London. “The closer we get to June 1 without a resolution, the greater the risk of an accident so there is a lot of potential for markets to get concerned.”
Greek markets were a bright spot after Sunday’s national election resulted in a strong showing for Prime Minister Kyriakos Mitsotakis, signaling that investment-friendly policies will continue.
The benchmark Athens Stock Exchange General Index jumped to its highest level in almost a decade. The premium investors demand to hold Greek 10-year debt, compared with super-safe bonds of Germany, fell to the lowest in more than a year.
Commodities were broadly weaker because of concern over China’s post-Covid economic recovery. Iron ore futures dropped on signs of disappointing steel demand from the construction sector, while the most recent batch of industrial and retail sales data was unexpectedly soft.
Asian shares rallied, however, as investors focused on Biden’s hints about improving relations with Beijing. His prediction that Sino-US ties would “begin to thaw very shortly” lifted Hong Kong stocks more than 1%.
Key events this week:
- Fed presidents speaking are James Bullard, Raphael Bostic and Thomas Barkin, Monday
- Eurozone S&P Global Eurozone Manufacturing & Services PMI, Tuesday
- US new home sales, Tuesday
- Dallas Fed President Lorie Logan speaks, Tuesday
- Fed issues minutes of May 2-3 policy meeting, Wednesday
- Bank of England Governor Andrew Bailey speaks, Wednesday
- US initial jobless claims, GDP, Thursday
- Interest rate decisions in Turkey, South Africa, Indonesia, South Korea, Thursday
- Tokyo CPI, Friday
- US consumer income, wholesale inventories, durable goods, University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
- The S&P 500 rose 0.3% as of 9:38 a.m. New York time
- The Nasdaq 100 rose 0.3%
- The Dow Jones Industrial Average rose 0.2%
- The Stoxx Europe 600 was little changed
- The MSCI World index was little changed
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro rose 0.1% to $1.0818
- The British pound was little changed at $1.2451
- The Japanese yen fell 0.3% to 138.46 per dollar
Cryptocurrencies
- Bitcoin rose 0.3% to $26,932
- Ether rose 0.9% to $1,823.01
Bonds
- The yield on 10-year Treasuries advanced two basis points to 3.70%
- Germany’s 10-year yield advanced three basis points to 2.46%
- Britain’s 10-year yield advanced five basis points to 4.04%
Commodities
- West Texas Intermediate crude rose 0.1% to $71.65 a barrel
- Gold futures fell 0.3% to $1,994.90 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Tassia Sipahutar, Richard Henderson, Aline Oyamada and Allegra Catelli.
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