© Reuters. US President Joe Biden hosts debt reduction talks with House Speaker Kevin McCarthy (R-Calif.), Vice President Kamala Harris and other congressional leaders in the Oval Office of the White House in Washington, US, on May 16, 2023. REUTERS/Evelyn Hook
A look at the coming day in the European and global markets from Kevin Buckland
You didn’t think it would be that easy, did you?
Investors are on edge after stocks and the dollar fell on Friday, when Republican negotiators unexpectedly pulled out of debt ceiling talks.
The discussions now appear to be back on track, as President Joe Biden is scheduled to meet with Republican House Speaker Kevin McCarthy later today. But brinkmanship highlights that as long as there is no agreement, the possibility of a catastrophic US debt default is impossible to ignore.
Time is running out, with less than two weeks before the alleged “tenth date” for the Treasury to run out of money in early June.
The dollar was heavy in Asia, and stocks fell across much of the region, heralding weakness when Europe also wakes up.
The notable exception was China, where stocks rose in the mainland and in Hong Kong, where they rebounded from their lowest levels in two months.
One reason: The moody music emitted from the G7 summit over the weekend was much nicer to China’s ears than some had feared, as it expressed a desire to “de-risk, not detach” from economic relations with China.
At the same time, though, China has escalated its dispute with the United States over chip technology, and Micron Products (NASDAQ: Technologies) has failed a security review.
Another potential boost comes from the People’s Bank of China (PBOC) assessment that the fundamentals of China’s economic stability and long-term improvement remain unchanged.
The European economic calendar is relatively light today, although ECB officials may want to monitor Eurozone consumer confidence data for this month, after an aggressive monetary tightening campaign. Central Bank President Christine Lagarde sent a clear hawkish signal on Friday, telling policymakers to “commit”.
Luis de Guindos and Philip Lane are among Lagarde’s colleagues at the European Central Bank on speaking duty today.
In the US, Monday’s Federal Reserve speakers include James Bullard, Rafael Bostick and Tom Barkin — though they risk being drowned out by Chairman Jay Powell’s comments from Friday that he’d rather pause next month, than stroll.
Key developments that may affect the markets on Monday:
Eurozone consumer confidence report
Speaking from Luis de Guindos of the European Central Bank and Philip Lane
Bullard, Bostic and Parkin speak from the Fed