Global stocks surge on US debt breakthrough
Published: 02:06 PM,Jun 02,2023 | EDITED : 06:06 PM,Jun 02,2023
Pedestrians walk past a sign showing the closing numbers of the Hang Seng Index in Hong Kong. - AFP
LONDON: World stocks rallied Friday after senators voted to suspend the US debt ceiling in an 11th-hour deal, eliminating the threat of a potentially catastrophic default.
London, Paris and Frankfurt bourses leapt after bumper gains in Asia and on Wall Street, as investors welcomed news that the world's biggest economy would not run out of money to pay its bills.
Hammered out between Democratic President Joe Biden and the Republicans, the measure passed the Senate on Thursday with a comfortable majority of 63 votes to 36 a day after it had sailed through the House of Representatives, ending months of wrangling.
"The Senate swiftly approved the new debt ceiling deal in the US prompting relief in the markets," said AJ Bell investment director Russ Mould.
"A bigger bounce might have been forthcoming had investors not already been very much factoring in an agreement, with only a modest sell-off around the crisis."
Oil prices meanwhile jumped as traders eyed a weekend output meeting of the OPEC+ grouping of crude producers.
London stocks were also lifted after pet care firm Dechra Pharmaceuticals agreed to a £4.5-billion takeover by Swedish private equity firm EQT and the Abu Dhabi Investment Authority.
Attention has meanwhile returned to the US central bank's drive to defeat decades-high inflation.
There are increasing hopes that the US Federal Reserve will decide against lifting interest rates this month as officials assess the impact of more than a year of tightening.
Traders also welcomed data Thursday that showed private hiring slowed in May -- albeit at a slower pace than forecast -- and wage growth eased for a second straight month.
The news bodes well for the release of the more closely followed non-farm payrolls figure, which the Fed uses as one of its crucial guides for monetary policy.
"Markets are ending the week on a positive note, as traders turn their attention to the US jobs report," said OANDA analyst Craig Erlam.
"We're hearing some positive noises from the Fed in recent days around the prospect of a pause in order to allow more time for the data to moderate and be fully analysed but even so, another red hot jobs report today may be impossible to ignore."
Monetary policy officials have said a softer labour market and much lower inflation were key to the bank being able to stop lifting borrowing costs.
Expectations were already running high that the Fed will hold its horses on rates for the first time in more than a year when it meets later this month, but comments from two officials added to the optimism.
Analysts said there was now a 24-per cent chance of a Fed hike, compared with 69 per cent priced in last Friday. - AFP
London, Paris and Frankfurt bourses leapt after bumper gains in Asia and on Wall Street, as investors welcomed news that the world's biggest economy would not run out of money to pay its bills.
Hammered out between Democratic President Joe Biden and the Republicans, the measure passed the Senate on Thursday with a comfortable majority of 63 votes to 36 a day after it had sailed through the House of Representatives, ending months of wrangling.
"The Senate swiftly approved the new debt ceiling deal in the US prompting relief in the markets," said AJ Bell investment director Russ Mould.
"A bigger bounce might have been forthcoming had investors not already been very much factoring in an agreement, with only a modest sell-off around the crisis."
Oil prices meanwhile jumped as traders eyed a weekend output meeting of the OPEC+ grouping of crude producers.
London stocks were also lifted after pet care firm Dechra Pharmaceuticals agreed to a £4.5-billion takeover by Swedish private equity firm EQT and the Abu Dhabi Investment Authority.
Attention has meanwhile returned to the US central bank's drive to defeat decades-high inflation.
There are increasing hopes that the US Federal Reserve will decide against lifting interest rates this month as officials assess the impact of more than a year of tightening.
Traders also welcomed data Thursday that showed private hiring slowed in May -- albeit at a slower pace than forecast -- and wage growth eased for a second straight month.
The news bodes well for the release of the more closely followed non-farm payrolls figure, which the Fed uses as one of its crucial guides for monetary policy.
"Markets are ending the week on a positive note, as traders turn their attention to the US jobs report," said OANDA analyst Craig Erlam.
"We're hearing some positive noises from the Fed in recent days around the prospect of a pause in order to allow more time for the data to moderate and be fully analysed but even so, another red hot jobs report today may be impossible to ignore."
Monetary policy officials have said a softer labour market and much lower inflation were key to the bank being able to stop lifting borrowing costs.
Expectations were already running high that the Fed will hold its horses on rates for the first time in more than a year when it meets later this month, but comments from two officials added to the optimism.
Analysts said there was now a 24-per cent chance of a Fed hike, compared with 69 per cent priced in last Friday. - AFP