German stocks rallied, putting the DAX Index on track for a record close, as a broad rally swept up European stocks.
(Bloomberg) — German stocks rallied, putting the DAX Index on track for a record close, as a broad rally swept up European stocks.
Signals that US politicians may reach a debt-ceiling deal as soon as this weekend have lifted markets across the board and given investors a renewed sense of confidence.
The S&P 500 hit a nine-month high on Thursday and oil is heading for its best week since mid-April. The Nikkei 225 closed at a 33-year peak. The DAX Index’s 0.7% gain put it within reach of its first record since January 2022.
In a call early Friday from Japan, President Joe Biden told his negotiating team that he’s confident Congress will act in time to avoid a default, according to a White House official. House Speaker Kevin McCarthy and Senate Majority Leader Chuck Schumer are making plans for votes in the coming days on a bipartisan deal.
“Growing optimism for a resolution to the debt ceiling negotiations has lifted sentiment, although the mood was slightly tempered by question marks over the Federal Reserve’s next move on interest rates,” said Richard Hunter, head of markets at Interactive Investor.
In Europe, the DAX added 0.5%, moving closer to a peak. The index last set a record on a closing basis in January 2022. Falling energy prices and China’s reopening has turned European stocks into a popular trade, through skepticism is building that the rally can continue.
According to strategists surveyed by Bloomberg, the Stoxx Europe 600 Index is poised to fall to 450 points by year-end, implying a drop of about 3% from Wednesday’s close.
Meanwhile, S&P 500 futures were little changed and Treasuries were flat after a Thursday selloff that signaled traders are shifting expectations for the Federal Reserve to keep rates higher for longer. An index of the dollar slipped 0.2%.
Chinese stocks were the outlier to Friday’s risk-on mood. The Hang Seng Tech Index slumped as much as 2.4% as Alibaba Group Holding Ltd dropped in the wake of disappointing sales.
“The recovery in China is slowing down,” said Ashish Shah, chief investment officer, Goldman Sachs Asset Management, on Bloomberg Television. “We all expected it wouldn’t be a straight line — you will go through waves,” said Shah, adding that the central bank would “have to run a lot looser policies going forward.”
Key events this week:
- 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 5:03 a.m. New York time
- Nasdaq 100 futures rose 0.2%
- Futures on the Dow Jones Industrial Average rose 0.1%
- The Stoxx Europe 600 rose 0.7%
- The MSCI World index rose 0.2%
Currencies
- The Bloomberg Dollar Spot Index fell 0.2%
- The euro rose 0.2% to $1.0791
- The British pound was little changed at $1.2414
- The Japanese yen rose 0.4% to 138.14 per dollar
Cryptocurrencies
- Bitcoin rose 0.7% to $26,907.24
- Ether rose 0.8% to $1,810.87
Bonds
- The yield on 10-year Treasuries declined two basis points to 3.63%
- Germany’s 10-year yield was little changed at 2.44%
- Britain’s 10-year yield was little changed at 3.96%
Commodities
- West Texas Intermediate crude rose 0.4% to $72.15 a barrel
- Gold futures rose 0.4% to $1,985.70 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Rob Verdonck.
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