Stocks Gain on Hopes for Debt Ceiling Breakthrough: Markets Wrap

(Bloomberg) — Stocks and commodities jumped as investors bet that US politicians will be able to negotiate a solution to the debt ceiling crisis, with President Joe Biden expressing optimism that a deal can be reached.

Most Read from Bloomberg

S&P 500 futures rose 0.4%, indicating a rebound from Friday’s decline. Other markets leaned towards risk, with copper advancing and mining stocks leading gains among European stocks. The South African rand jumped amid signs that the diplomatic row with the United States is easing.

The US debt ceiling remains the biggest focus for investors this week and strategists warn of market turmoil and economic disaster if politicians do not agree to raise the $31.4 trillion government borrowing limit. Joe Biden, House Speaker Kevin McCarthy and other congressional leaders plan to hold more talks on Tuesday. They were previously scheduled to meet on Friday, but postponed the meeting as discussions continued at the staff level throughout the weekend.

“When you look from afar in Europe at US politics right now it’s hard to see how they’re finding common ground, but the alternative is so bad it’s probably forcing ground,” said Luke Hickmore, investment director at Abrdn. “The risks are definitely still there.”

Finally, the Fed’s grip on Wall Street trading has loosened

The standoff in Washington is just one of the many risks that are keeping investors sidelined, from recession to cracks in the banking system to dashed hopes of a shift to easier monetary policy. The S&P 500’s 0.3% drop last week was the sixth consecutive week without a 1% move — the longest stretch of inertia since late 2019.

In other markets, the Turkish lira weakened as the country’s presidential election looked set for a second round in two weeks. State banks, which intervened earlier to support the exchange rate, mitigated their losses, according to people familiar with the matter.

Story continues

The Thai baht jumped as pro-democracy parties took the most votes in the weekend elections.

Main events this week:

• Eurozone Industrial Production, Monday

• American Investing Across Borders, New York Fed Empire Manufacturing, Monday

• Raphael Bostick of the Federal Reserve Bank of Atlanta speaks at his bank’s annual Financial Markets Conference, Monday

• China retail sales, industrial production, Tuesday

• US Retail Sales, Industrial Production, Business Inventories, Tuesday

• Speakers at the Federal Reserve include Loretta Mester of Cleveland, John Williams of New York, Raphael Bostick of Atlanta, and Austin Goolsby of Chicago, Tuesday.

• Japanese GDP, Wed

• Eurozone CPI, Wednesday

• Residences begin in the US, Wednesday

• Bank of England Governor Andrew Bailey speaking at the British Chamber of Commerce, Wednesday

• US Initial Jobless Claims, Conference Board’s leading indicator, Existing Home Sales, Thursday

• Japanese CPI, Friday

• European Central Bank President Christine Lagarde takes part in a panel discussion at the Central Bank of Brazil conference, Friday

• John Williams of the Federal Reserve Bank of New York speaks at the Monetary Policy Research Conference in Washington, and Fed Chairman Jerome Powell and former Chairman Ben Bernanke will take part in a panel discussion on Friday.

Some of the major movements in the markets:

Stores

• The Stoxx Europe 600 Index is up 0.3% as of 10:10 a.m. London time.

• S&P 500 futures rose 0.5%

• Nasdaq 100 futures rose 0.5%.

• Futures on the Dow Jones Industrial Average rose 0.5%.

• MSCI Asia Pacific rose 0.5%

• The MSCI Emerging Markets Index rose 0.4%.

currencies

• The Bloomberg Spot Dollar Index has not changed

• The euro rose 0.1 percent to $1.0860

• The Japanese yen fell 0.3 percent to 136.13 per dollar

• The British pound rose 0.2 percent to $1.2481

Digital currencies

• Bitcoin rose 1.8% to $27,437.59

• Ether rose 1.8% to $1,830.93

bonds

• The yield on the 10-year Treasury note advanced 1 basis point to 3.47%.

• Germany’s 10-year yield advanced 2 basis points to 2.29%

• The UK 10-year yield was little changed at 3.79%.

goods

• Brent Crude hasn’t changed much

• Spot gold rose 0.3 percent to $2,016.19 an ounce

This story was produced with help from Bloomberg Automation.

Most Read from Bloomberg Businessweek

© 2023 Bloomberg LP