Asian stocks and Wall Street futures trade mixed this Monday, after the agreement reached over the weekend by the president of the United States, Joe Bidenand the Speaker of the House of Representatives, kevin mccarthyto lift the country’s debt ceiling, which was a relief for investors, although concerns about China tempered sentiment.
The futures of Euro Stoxx 50 paneuropean fell 0.5%, while those of the S&P 500 and nasdaq they were up 0.3%. After weeks of negotiations, Republican Congressman McCarthy and Democratic President Biden agreed on Saturday to avoid an economically destabilizing default by suspending the $31.4 trillion debt ceiling through 2025.
Analysts also noted that the US debt ceiling deal still has to pass votes in the House of Representatives, perhaps on Wednesday, and then in the Senate. However, there will be a clearer reaction when the US and UK markets reopen.
The main stock markets of the Asia-Pacific region closed today with mixed results, according to data from the Bloomberg agency, on a day in which South Korea did not operate due to a holiday. Tokyo rose 1.03%, Taiwan 0.80% and China fell 0.80% in its Shenzhen index and rose 0.28% in Shanghai, while Hong Kong fell 1.04%..
Meanwhile, the main European stock markets closed mixed this Monday, the pan-European STOXX 600 index fell 0.1%, after posting its biggest one-day rise in almost two months on Friday. Although the markets of the United Kingdom and several European countries remained closed on Monday for the holiday, as was Wall Street.
After hitting multi-year highs in early May on the back of an upbeat earnings season, concerns over a stagnant debt ceiling and signs of a global economic slowdown have weighed on European stocks of late. The benchmark STOXX 600 index is on track to post its biggest monthly drop of the year.
The actions of SBB They rose 2.6% from record lows as the struggling Swedish property group is expanding a strategic review to include a possible sale of the entire company or some of its business segments. On Friday, Fitch cut its credit rating to “junk” category, citing insufficient deleveraging.
He IBEX Spain fell 0.1% after Socialist President Pedro Sánchez unexpectedly called early national elections and his main rival laid out his goal of becoming the country’s next leader, after the PSOE was defeated in regional elections.
2 data that could moderate the relief
“It’s possible that there will be some initial relief that will push yields down slightly and the dollar will rise a bit, along with equities. But the vicissitudes of the deal’s passage in Congress may dampen (optimism),” Vishnu said. Varathan, head of economics at Mizuho Bank in Singapore.
“And beyond that, the prevailing implications of tightening issuance liquidity to bolster drying cash at the Treasury may perversely lift yields and dampen equities.”
Holiday in the USA
Spot US Treasuries were not trading in Asia on Monday due to the Memorial Day holiday, while futures were flat. Two-year yields hit a 2 1/2-month high of 4.6390% on Friday as the market bets on higher Federal Reserve rates for longer.
US stocks rose late last week on hopes of a debt ceiling deal and bets on artificial intelligence companies. The Dow Jones industrial index ended a five-day losing streak on Friday, while the Nasdaq Composite Index and S&P 500 closed at their highest levels since August 2022.
“We always thought there was going to be a resolution and now we have it, so that removes some of the uncertainty for the markets. But when we get past that, when the ballots go through and when we come back from the Memorial Day holiday, the question It will be: what’s next?” said Tony Sycamore, IG markets analyst.
“Yes, we will get the relief bounce in the short term, but then we have to start thinking about the June FOMC meeting, inflation being tougher than expected and money leaving the markets.”
The Federal Reserve’s preferred inflation gauge, the personal consumption expenditures (PCE) price index, came in stronger than expected on Friday. Coupled with the strength of US consumer spending, markets are now favoring a quarter point hike from the Federal Reserve next month and expect rates to stay at that level for the rest of the year.
Data on job openings and the job creation report due later in the week could influence the Federal Reserve’s June decision. Economists polled by Reuters forecast an increase in payrolls of 195,000 jobs in May, compared to 253,000 the previous month.
In Turkey, the lira was trading at 20.05 against the dollar, just above its record low of 20.06 hit on Friday, after President Tayyip Erdogan won the country’s presidential election, extending his increasingly more authoritarian government a third decade.
In currency markets, the dollar index, which measures the value of the greenback against its main rivals, was down slightly at 104.17 as risk-sensitive currencies rallied. However, it remains close to the two-month high reached on Friday.
Oil prices rise. Brent crude futures added 0.8% to $77.47 a barrel, while West Texas Intermediate crude was at $73.25 a barrel, also up 0.8%.
Source: Ambito
