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Global shares mostly rise despite worries about US debt talks

TOKYO (AP) – Global shares mostly drifted higher yesterday as investors fretted over whether the United States (US) government will be able to reach a deal to avoid a federal default.

France’s CAC 40 inched down less than 0.1 per cent in early trading to 7,489.72, while Germany’s DAX slipped 0.1 per cent to 16,261.45. Britain’s FTSE 100 gained 0.3 per cent to 7,780.30. US shares drifted higher with Dow futures up less than 0.1 per cent at 33,512.00. S&P 500 futures rose less than 0.1 per cent to 4,206.00.

Japan’s benchmark Nikkei 225 gained 0.9 per cent to finish at 31,086.82. Australia’s S&P/ASX 200 slid 0.2 per cent to 7,263.30. South Korea’s Kospi gained 0.8 per cent to 2,557.08. Hong Kong’s Hang Seng jumped 1.2 per cent to 19,678.17, while the Shanghai Composite edged up 0.4 per cent to 3,296.47.

Markets are closely watching a pivotal meeting at the White House between President Joe Biden and House Speaker Kevin McCarthy on the debt ceiling.

A default on the US debt would almost surely cause a recession in the American economy, which would have damaging effects on global economies.

A currency trader at a foreign exchange dealing room in Seoul, South Korea. PHOTO: AP

“It seems pretty likely that a full-fledged deal will be reached before early June, but the timing is hard to predict,” managing partner at SPI Asset Management Stephen Innes said of the US efforts to avoid a potentially disastrous default on its debt.

“While negotiation strategy and political incentives imply a last-minute deal, we will soon find out if it’s baked beans or lobster during the Memorial Day holiday.”

Data for machinery orders in Japan for March, released yesterday, highlighted a slowdown in the world’s third-largest economy, with the key indicator falling 3.9 per cent for the second straight month of declines. But analysts think a recovery is coming during this quarter, as domestic manufacturing gradually rebounds from the various negative effects related to the pandemic.

The White House and House Republicans wrapped up another round of talks over the weekend.

Washington needs to strike a budget compromise along with a deal to raise the nation’s borrowing limit to avoid a federal default. Democrats and Republicans face a June 1 deadline, which is when the US government could run out of cash to pay its bills unless Congress allows it to borrow more.

On the positive side, US Federal Reserve Chair Jerome Powell made comments on Friday indicating the Fed may leave interest rates alone at its next meeting in June.

The majority of companies in the S&P 500 have been reporting stronger earnings for the start of the year than analysts expected. But they’re still on track to report a second consecutive quarter of profit declines from year-ago levels.

In energy trading, benchmark US crude lost USD0.47 to USD71.08 a barrel. Brent crude, the international standard, fell USD0.23 to USD75.35 a barrel.

In currency trading, the US dollar inched down to JPY137.86 from JPY137.88. The euro cost USD1.0811, up from USD1.0808.