Stocks and commodities climbed as investors bet that US politicians will be able to negotiate a solution to the debt-ceiling standoff, with President Joe Biden voicing optimism that a deal could be reached.
(Bloomberg) — Stocks and commodities climbed as investors bet that US politicians will be able to negotiate a solution to the debt-ceiling standoff, with President Joe Biden voicing optimism that a deal could be reached.
S&P 500 futures added 0.2%, signaling a modest rebound from Friday’s retreat. Other markets tilted risk-on as copper advanced and mining shares led gains among European stocks. South Africa’s rand jumped on signs that a diplomatic row with the US is softening.
The US debt ceiling remains the biggest focus for investors this week and strategists are warning about market turmoil and economic disaster if politicians don’t agree to raise the government’s $31.4 trillion borrowing limit. Joe Biden, House Speaker Kevin McCarthy and other congressional leaders are planning to hold further talks on Tuesday. They were previously scheduled to meet on Friday, but postponed it as staff level discussions continued throughout the weekend.
“When you look from afar in Europe at American politics right now it is difficult to see how they get to common ground, but the alternative is so bad maybe it forces that ground to be found,” said Luke Hickmore, investment director at Abrdn. “The risks are still there for sure.”
The Fed’s Iron-Grip Over Wall Street Trading Is Finally Easing
The showdown in Washington is just one of many risks keeping investors sidelined, from recession to cracks in the banking system to disappointed hopes for a turn to easier monetary policy. The S&P 500’s decline of 0.3% last week marked the sixth straight week without a 1% move — the longest stretch of inertia since late 2019.
“There’s quite a fair bit of ongoing risk in the market,” Audrey Goh, senior cross asset strategist at Standard Chartered Wealth Management Group, said in an interview on Bloomberg Television. “The debt-ceiling talks are still in the making, at the same time we’ve also got inflation still quite elevated. There could be further downside from here where equity markets are concerned.”
Treasuries slipped, reversing Friday’s gains, while the dollar fell against almost all its Group of 10 peers.
In US premarket trading, Oneok Inc. fell on its bid for Magellan Midstream Partners. Shake Shack gained on activist plans for board changes at the burger chain.
Key events this week:
- Eurozone industrial production, Monday
- US cross-border investment, New York Fed Empire Manufacturing, Monday
- Atlanta Fed’s Raphael Bostic speaks at his bank’s annual financial markets conference, Monday
- China retail sales, industrial production, Tuesday
- US retail sales, industrial production, business inventories, Tuesday
- Fed speakers include Cleveland’s Loretta Mester, New York’s John Williams, Atlanta’s Raphael Bostic and Chicago’s Austan Goolsbee, Tuesday
- Japan GDP, Wednesday
- Eurozone CPI, Wednesday
- US housing starts, Wednesday
- BOE Governor Andrew Bailey speaks at the British Chamber of Commerce, Wednesday
- US initial jobless claims, Conference Board leading index, existing home sales, Thursday
- Japan CPI, Friday
- ECB President Christine Lagarde participates in panel at Brazil central bank conference, Friday
- New York Fed’s John Williams speaks at monetary policy research conference in Washington, and Fed Chair Jerome Powell and former chair Ben Bernanke to take part in panel discussion, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.2% as of 8:35 a.m. New York time
- Nasdaq 100 futures rose 0.2%
- Futures on the Dow Jones Industrial Average rose 0.2%
- The Stoxx Europe 600 rose 0.2%
- The MSCI World index rose 0.2%
Currencies
- The Bloomberg Dollar Spot Index fell 0.2%
- The euro rose 0.3% to $1.0886
- The British pound rose 0.5% to $1.2520
- The Japanese yen fell 0.1% to 135.87 per dollar
Cryptocurrencies
- Bitcoin rose 1.6% to $27,371.94
- Ether rose 1.5% to $1,826.14
Bonds
- The yield on 10-year Treasuries advanced two basis points to 3.48%
- Germany’s 10-year yield advanced three basis points to 2.30%
- Britain’s 10-year yield advanced one basis point to 3.79%
Commodities
- West Texas Intermediate crude rose 0.7% to $70.56 a barrel
- Gold futures were little changed
This story was produced with the assistance of Bloomberg Automation.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.