New York: 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 finish 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 steadied after a selloff on mounting doubts over whether the Federal Reserve will be able to pause its credit tightening campaign next month. An index of the dollar slipped.
Chinese stocks were the outlier to Friday’s risk-on mood. The Hang Seng Tech Index slumped as much as 2.4 per cent as Alibaba Group Holding 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 currency and called for more market stability. The offshore yuan extended a rise on the PBOC statement, gaining 0.5 per cent to 7.0136 per dollar.
In the premarket, Foot Locker tumbled 25 per cent after the athletic retailer slashed its sales and profit projections for the year. Nike, Adidas and Under Armour fell in sympathy.