Global shares rise on hopes of US debt ceiling deal, gold eases

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New York/London (Reuters) –

Global stocks rose on Monday as talks resumed in Washington to avoid a US default, and gold prices fell under pressure from hawkish rhetoric from Federal Reserve officials.

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Oil prices closed higher on demand optimism, while US Treasury yields rose.

Republican House Speaker Kevin McCarthy said Monday morning’s debt talks were “

on the right track

Before meeting US President Joe Biden. June 1 remains a “hard deadline” after which the Treasury Department expects the federal government to struggle to pay its debts.

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Failure to raise the debt ceiling will result in a default, and will likely lead to chaos in the financial markets and higher interest rates.

The MSCI World Equity Index, which tracks stocks in 49 countries, was up 0.32% by 2:38 PM ET (1838 GMT).

Major indices on Wall Street were mostly higher. The S&P 500 rose 8.72 points, or 0.21%, to 4,200.70, and the Nasdaq Composite rose 74.40 points, or 0.59%, to 12,732.30.

The Dow Jones Industrial Average fell 79.12 points, or 0.24%, to 33,347.51.

There is widespread expectation of a deal in Washington. “The market is responding to that,” said Quincy Crosby, head of global strategy at LPL Financial in Charlotte, North Carolina.

There have been some hedge fund buys in regional banks. This is a healthy sign for the market.”

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KBW Banking rose 2.55%.

The European STOXX 600 index recovered previous losses.

Jonathan Pingel, chief US economist at UBS, said the Japanese yen and gold are best suited to benefit from any US default.

“A deadlock of just one month after date X is likely to cause financing conditions to tighten sharply enough to cause the dollar to rally strongly,” Pingle said.

Chip ban

Asian stocks rose after China on Sunday banned US firm Micron from selling memory chips to key domestic industries over security concerns.

The ban has helped the stocks of Micron’s competitors in China and elsewhere, which are likely to benefit as mainland companies seek memory products from other sources.

Minneapolis Fed Chairman Neel Kashkari said it was a “close call” whether he would vote to raise interest rates or to stop the central bank’s tightening cycle when it meets next month. San Francisco Fed President Mary Daly said it was too early to say what the central bank would do next.

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his inflation

Eat

The Fed said US households’ sense of financial security.

Futures are close to a 90% chance that the Fed will keep interest rates unchanged at its next meeting in June, and close to 50 basis points for cuts by the end of the year.

No one should think that the Federal Reserve is afraid to raise interest rates again. “They have the luxury of a strong job market, a consumer who is still willing to spend, and an economy that is growing, albeit slowly,” said LPL’s Crosby.

Spot gold prices fell 0.18% to $1,972.99 an ounce. Gold futures settled down 0.22%, at $1,977.20.

The yield on the benchmark 10-year Treasury note rose to 3.7091%, compared to Friday’s close of 3.692%. The two-year yield, which rose as traders expected a hike in the federal funds rate, touched 4.3133% from the previous close of 4.289%.

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The dollar index, which measures the greenback against a basket of other major trading partner currencies, rose to 103.21.

In Asia, China kept key lending rates unchanged even as the economic recovery disappointed. Traders were also grasping the implications of the G7’s “de-risking, not decoupling” approach to China and supply chains that the group referred to at its summit.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.6%.

US crude closed up 0.61% at $71.99 a barrel. Brent crude rose 0.54 percent, to settle at $75.99 a barrel.

(Reporting by Chris Prentice, Neil McKenzie, Stella Q, and Ray Wei; Illustrations by Kripa Jayaram and Louis Krauskopf; Editing by Sam Holmes, Muralikumar Anantharaman, Jane Merriman and Mark Heinrich)