Markets pointed to a recovery from a selloff on Wall Street as traders pinned hopes that talks in Washington would lead to a breakthrough. The dollar rose to the highest in more than five weeks.
(Bloomberg) — Markets pointed to a recovery from a selloff on Wall Street as traders pinned hopes that talks in Washington would lead to a breakthrough. The dollar rose to the highest in more than five weeks.
US stock futures rose and Treasuries steadied as White House and congressional negotiators continued to try to breach an impasse to raise the debt ceiling.
Anxiety that leaders in Washington will be unable to stave off a historic default before the June 1 deadline is unsettling markets. Yields rose across the US curve Tuesday, with the rate on 30-year notes climbing to around 3.9% — the highest since the turmoil affecting regional banks that erupted in early March.
“That is leading to the reason why equity markets have stalled over the last couple of weeks because you are not really paid now to make big bets ahead of this event,” Grace Peters, JPMorgan Private Bank’s head of investment strategy, said in an interview with Bloomberg TV.
Negotiators are seeking a framework agreement to review upon President Joe Biden’s return from a truncated trip to Asia. Any breakthrough in the talks would give markets cause to rally, dissipating one of the biggest tail risks weighing on sentiment.
“Longer term, that would be a dip that we would buy if that were to come to pass,” Peters said. “The market does ultimately I think assume this will get resolved.”
In Europe, the Stoxx 600 traded in a narrow range. After rallying nearly 10% this year until the end of April, Europe’s equity benchmark has meandered in May on worries about higher-for-longer interest rates and a looming recession.
London Stock Exchange Group Plc shares were among the biggest laggards after a consortium of investors including Blackstone Inc. and Thomson Reuters Corp. sold shares in the group. Siemens AG ticked 1.7% higher after it raised its outlook for a second time in fiscal 2023 as revenue and orders jumped.
“The combination of weaker China data, ongoing US debt ceiling concerns and May seasonality trends has translated to a pause in global stocks this month,” said Carl Dooley, head of EMEA trading at TD Cowen in London.
Key events this week:
- Eurozone CPI, Wednesday
- BOE Governor Andrew Bailey delivers keynote speech, Wednesday
- US housing starts, 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; 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 5:10 a.m. New York time
- Nasdaq 100 futures rose 0.1%
- Futures on the Dow Jones Industrial Average rose 0.3%
- The Stoxx Europe 600 fell 0.2%
- The MSCI World index fell 0.2%
Currencies
- The Bloomberg Dollar Spot Index rose 0.3%
- The euro fell 0.3% to $1.0827
- The British pound fell 0.5% to $1.2427
- The Japanese yen fell 0.5% to 137.07 per dollar
Cryptocurrencies
- Bitcoin fell 0.5% to $26,828.34
- Ether fell 0.8% to $1,806.37
Bonds
- The yield on 10-year Treasuries was little changed at 3.54%
- Germany’s 10-year yield declined three basis points to 2.32%
- Britain’s 10-year yield declined two basis points to 3.80%
Commodities
- West Texas Intermediate crude was little changed
- Gold futures fell 0.2% to $1,989.70 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Allegra Catelli, Sagarika Jaisinghani and Michael Msika.
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