Markets embraced optimism that leaders in Washington are nearing a deal to raise the debt ceiling, sparking a broad rally in stocks from Europe to Japan Friday.
(Bloomberg) — Markets embraced optimism that leaders in Washington are nearing a deal to raise the debt ceiling, sparking a broad rally in stocks from Europe to Japan Friday.
The DAX Index headed for first record since January 2022, oil was set to finish its best week since mid-April and the Nikkei 225 closed at a 33-year peak, as momentum carried over from Wall Street. Futures in the S&P 500 added 0.3% after the gauge hit a nine-month high on Thursday.
In a call early Friday from Japan, President Joe Biden told his negotiating team that he’s confident Congress will act in time to avoid a default, according to a White House official. House Speaker Kevin McCarthy and Senate Majority Leader Chuck Schumer are making plans for votes in the coming days on a bipartisan deal.
“Growing optimism for a resolution to the debt ceiling negotiations has lifted sentiment, although the mood was slightly tempered by question marks over the Federal Reserve’s next move on interest rates,” said Richard Hunter, head of markets at Interactive Investor.
Treasuries extended their selloff on mounting doubts over whether the Federal Reserve will be able to pause its credit tightening campaign next month. The yield on the rate-sensitive two-year note climbed to 4.27%.
Chinese stocks were the outlier to Friday’s risk-on mood. The Hang Seng Tech Index slumped as much as 2.4% as Alibaba Group Holding Ltd dropped in the wake of disappointing sales.
China’s yuan recovered from an earlier loss after the central bank vowed to curb speculation in the currency and called for more market stability. The offshore yuan gained 0.5% to 7.0136 per dollar.
In the premarket, Foot Locker Inc. tumbled 25% after the athletic retailer slashed its sales and profit projections for the year. Nike Inc., Adidas AG and Under Armour Inc. fell in sympathy.
Deere & Co. shares jumped 3.5% after the farm equipment maker boosted its net income guidance for the full year, beating the average analyst estimate.
Key events this week:
- ECB President Christine Lagarde participates in panel at Brazil central bank conference, Friday
- New York Fed’s John Williams speaks at monetary policy research conference in Washington; Fed Chair Jerome Powell and former chair Ben Bernanke to take part in panel discussion, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.3% as of 8:36 a.m. New York time
- Nasdaq 100 futures were little changed
- Futures on the Dow Jones Industrial Average rose 0.3%
- The Stoxx Europe 600 rose 0.8%
- The MSCI World index rose 0.3%
Currencies
- The Bloomberg Dollar Spot Index fell 0.4%
- The euro rose 0.5% to $1.0822
- The British pound rose 0.5% to $1.2467
- The Japanese yen rose 0.3% to 138.23 per dollar
Cryptocurrencies
- Bitcoin rose 0.7% to $26,924.57
- Ether rose 1.1% to $1,815.72
Bonds
- The yield on 10-year Treasuries advanced three basis points to 3.68%
- Germany’s 10-year yield advanced five basis points to 2.50%
- Britain’s 10-year yield advanced nine basis points to 4.05%
Commodities
- West Texas Intermediate crude rose 1.7% to $73.11 a barrel
- Gold futures rose 0.3% to $1,985.10 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Rob Verdonck, Richard Henderson and Sagarika Jaisinghani.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.