Wednesday, February 19, 2025
24 C
Brunei Town
More

    European stock markets struggle on US debt nerves

    LONDON (AFP) – Europe’s stock markets struggled yesterday with investors nervous as a deadline to avert a calamitous United States (US) default draws closer.

    After an initial rebound, London and Paris stocks ran out of steam as the session progressed, while Frankfurt slipped into the red.

    “With the clock ticking on those debt ceiling negotiations and Congress having closed up for a long weekend break, there’s without doubt a degree of caution building over what happens next,” noted Scope Markets analyst Joshua Mahony.

    Asian equities mostly rose, however, on hopes that lawmakers are edging closer to a deal to hike the US debt ceiling.

    Markets have taken a hit in recent days on worries about the slow pace of negotiations in Washington, even after President Joe Biden and House Speaker Kevin McCarthy expressed optimism earlier in the week.

    On Thursday, Biden reiterated his pledge that “there will be no default” despite the wrangling, adding that talks with McCarthy, who leads the Republican negotiators, had been “productive”.

    A broker is pictured at the stock exchange in Frankfurt, Germany. PHOTO: AFP

    The speaker also expressed his determination to get an agreement to raise the borrowing limit by June 1, when the Treasury has warned the government is expected to run out of cash to service its debts.

    “We know where our differences lie,” he said. “We do not have an agreement yet. We knew this would not be easy. It’s hard, but we’re working. And we’re gonna continue to work till we get this done.”

    Reports said the two camps were edging towards a deal that would lift the debt ceiling and cap spending for two years.

    Pressure for a deal was ramped up after Fitch placed the country’s AAA-ranked credit on “rating watch negative” owing to the standoff.

    There is still plenty of rancour on Capitol Hill, with some Republicans questioning whether the US is even likely to default at all, despite warnings about the potential economic chaos it would cause.

    Democratic minority leader Hakeem Jeffries said Republicans had abandoned their jobs in Washington to go on holiday.

    “And these Republicans, they’re going to say that Joe Biden refused to sit down with them,” he added. Still, the broad consensus is for the borrowing limit to eventually be raised at the 11th hour, after a period of brinkmanship.

    Wall Street had a mixed Thursday, with the Nasdaq and S&P 500 surging higher thanks to a rally in tech firms fuelled by a blockbuster sales forecast from chip giant Nvidia.

    And Asian markets mostly rose yesterday, with Tokyo leading the way thanks to a weaker yen and softer inflation that had traders betting the Bank of Japan would not tighten monetary policy any time soon.

    The dollar on Thursday broke past JPY140 for the first time since November, with strong US data fanning expectations the Federal Reserve will hike interest rates again next month.

    Hong Kong was closed for a holiday.

    spot_img

    Related News

    spot_img