US stock futures advanced as appetite for risk taking returned to global markets following the deal between President Joe Biden and House Speaker Kevin McCarthy on the US debt ceiling.
(Bloomberg) — US stock futures advanced as appetite for risk taking returned to global markets following the deal between President Joe Biden and House Speaker Kevin McCarthy on the US debt ceiling.
Contracts for the S&P 500 climbed 0.5% and those for the Nasdaq 100 gained 0.6% as trading opened in Asia on Monday. Futures for benchmarks in Japan and Australia pointed higher while a gauge of US-listed Chinese stocks rallied Friday in a positive sign for Hong Kong traders there returning from a long weekend.
Oil and Bitcoin also increased with the more buoyant tone.
Moves in currency markets were muted, with the dollar trading in tight ranges of about 0.1% versus most of its major counterparts.
Investors had become increasingly confident on Friday that an agreement would be struck in Washington, supporting gains in the US equity benchmarks. Equities there also continued to be led higher by tech stocks and the frenzy surrounding artificial intelligence.
Investors Friday were also demanding less of a premium to hold US Treasury bills seen most at risk of nonpayment if a deal isn’t reached in time.
Yet the agreement struck by Biden and McCarthy over the weekend also needs to be passed by Congress, with the clock ticking down on June 5, when Treasury Secretary Janet Yellen has said cash will run out. There is plenty in the deal that Democrats and Republicans won’t like.
The bond market also has much to contend with. The Treasury will need to replenish is coffers by selling more debt and the passing of the deal puts focus back on the Federal Reserve’s fight to tame inflation.
The rate-sensitive two-year Treasury drifted Friday as traders considered how a debt agreement could play into the Fed’s path forward on interest rates. The two-year yield hovered around 4.65% after a report on consumer spending showed the Fed still has more work to do to bring inflation back toward its target. The personal consumption expenditures price index, one of the Fed’s preferred inflation gauges, rose by a faster-than-expected 0.4% in April.
In stocks Friday, the S&P 500 rose 1.3% and the tech-heavy Nasdaq 100 added 2.6% as Marvell Technology Inc. said 2024 revenues would “at least double” from a year ago on a surge in demand from AI, echoing sentiments from rival chipmaker Nvidia Corp. earlier in the week.
Elsewhere, there will be heightened interest in emerging markets after Turkish President Recep Tayyip Erdogan sealed an election victory, raising the prospect of more friction with Western governments and more uncertainty for investors.
Stocks
- S&P 500 futures 0.5% as of 7:07 a.m. Tokyo time. The S&P 500 rose 1.3% Friday
- Nasdaq 100 futures rose 0.6%. The Nasdaq 100 rose 2.6%
- Nikkei 225 futures rose 1.5%
- Australia’s S&P/ASX 200 Index futures rose 1%
Currencies
- The euro was little changed at $1.0725
- The Japanese yen fell 0.1% to 140.79 per dollar
- The offshore yuan was little changed at 7.0735 per dollar
- The Australian dollar rose 0.1% to $0.6525
Cryptocurrencies
- Bitcoin rose 1.9% to $28,085.5
- Ether rose 2.5% to $1,901.11
Bonds
- The yield on 10-year Treasuries declined two basis points to 3.80% Friday
Commodities
- West Texas Intermediate crude rose 0.9% to $73.32 a barrel
This story was produced with the assistance of Bloomberg Automation.
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