DAX Nears Record as Wall Street Rally Bubbles Over: Markets Wrap

Markets embraced optimism that leaders in Washington are nearing a deal to raise the debt ceiling, sparking a broad rally in stocks from Europe to Japan Friday.

(Bloomberg) — Markets embraced optimism that leaders in Washington are nearing a deal to raise the debt ceiling, sparking a broad rally in stocks from Europe to Japan Friday.

The DAX Index headed for first record since January 2022, oil was set to close out for its best week since mid-April and the Nikkei 225 closed at a 33-year peak, as momentum carried over from Wall Street. Futures in the S&P 500 ticked higher after the gauge hit a nine-month high on Thursday.

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.

Treasuries recouped some losses from a selloff on mounting doubts the Federal Reserve will pause its credit tightening campaign next month. An index of the dollar slipped 0.3%.

 

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. 

China’s yuan recovered from an earlier loss after the central bank vowed to curb speculation in the yuan and called for more stability in the foreign exchange market. The offshore yuan extended a rise after the PBOC statement, gaining 0.5% to 7.0136 per dollar, after breaching the closely-watched 7 per dollar level.

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

  • The Stoxx Europe 600 rose 0.7% as of 11:10 a.m. London time
  • S&P 500 futures rose 0.1%
  • Nasdaq 100 futures rose 0.2%
  • Futures on the Dow Jones Industrial Average were little changed
  • The MSCI Asia Pacific Index rose 0.4%
  • The MSCI Emerging Markets Index was little changed

Currencies

  • The Bloomberg Dollar Spot Index fell 0.3%
  • The euro rose 0.3% to $1.0797
  • The Japanese yen rose 0.4% to 138.14 per dollar
  • The offshore yuan rose 0.4% to 7.0183 per dollar
  • The British pound rose 0.2% to $1.2429

Cryptocurrencies

  • Bitcoin rose 0.5% to $26,856.3
  • Ether rose 0.7% to $1,808.88

Bonds

  • The yield on 10-year Treasuries declined one basis point to 3.64%
  • Germany’s 10-year yield advanced three basis points to 2.47%
  • Britain’s 10-year yield advanced four basis points to 3.99%

Commodities

  • Brent crude rose 1.1% to $76.71 a barrel
  • Spot gold rose 0.4% to $1,966.16 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Rob Verdonck, Richard Henderson and Sagarika Jaisinghani.

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