LONDON (AFP) – Global equities mostly advanced yesterday as traders grew increasingly hopeful that US lawmakers will hammer out a deal to lift the debt ceiling and avert a confidence-shattering default.
Wall Street’s main stock indices opened higher, with the Dow adding 0.1 percent.
European stocks were higher in afternoon trade, with Frankfurt’s DAX 40 index striking a record high of 16,293.68 points, following a largely buoyant Asian session, although Hong Kong and Shanghai slid on Chinese economic worries.
The dollar declined and oil prices advanced.
“Investors continue to respond positively to the optimistic discussions surrounding the debt-ceiling issue in Washington, which have bolstered market sentiment towards equities,” noted ActivTrades analyst Pierre Veyret.
After weeks of lumbering talks on Capitol Hill, congressional leaders appeared ready to put a proposal to lawmakers before the government runs out of cash, said to be around June 1.
In his most upbeat remarks yet on the high-stakes standoff, Republican House Speaker Kevin McCarthy said: “We’re not there – we haven’t agreed to anything yet – but I see the path (where) we could come to an agreement.”
McCarthy secured the Speaker’s gavel in January by pledging to his party’s ultra-conservative Freedom Caucus that any raise in the borrowing limit would only come with an evisceration of the federal budget. He and Democratic Senate Leader Chuck Schumer were planning to call for a vote in the coming days.
All three main indices on Wall Street jumped on Thursday to extend Wednesday’s bumper gains.
Yesterday, in Asia, Tokyo raced higher again, building on a recent surge in the Nikkei to a three-decade high even as data showed Japanese inflation continued to sit well above the central bank’s target, adding to pressure for it to tighten monetary policy.
Sydney, Seoul, Singapore, Mumbai, Taipei, Manila, Wellington and Jakarta were also well up.
But Hong Kong sank more than one percent owing to a sharp drop in tech firms after e-commerce titan Alibaba reported below-par earnings that reinforced concerns about China’s stuttering economy and consumer demand.
Shanghai also fell, and traders are keeping an eye on the central People’s Bank of China to see if it unveils any fresh stimulus measures following a string of below-forecast economic figures.
Meanwhile, the US dollar lost ground against rival currencies ahead of an appearance of Federal Reserve Chief Jerome Powell at a panel discussion.
The US central bank has raised its benchmark lending rate 10 times in quick succession since last year as it looks to suppress demand to tackle inflation, which remains well above its long-run target of two per cent.
But it indicated it will now decide its further action depending upon the latest data, raising the possibility of a pause at its June policy meeting.
However, several Fed monetary policymakers have spoken publicly that the current data point to another hike.
Briefing.com analyst Patrick O’Hare said if questioned on interest rates he believes Powell “will walk a neutral line that emphasises the Fed being data dependent”.
