Stock Market Today: Global Equities, Wall St Futures Rise on US Debt Deal Hopes

BEIJING (AP) Global stock markets and Wall Street futures rose Thursday on hopes US political leaders can reach agreement to avoid a potentially disastrous sovereign debt default.

London and Paris opened higher. Shanghai, Tokyo and Hong Kong advanced. The price of oil fell.

Wall Street rallied on Wednesday after President Joe Biden expressed confidence that America will not default despite the lack of agreement on Republican demands for cuts in aid to poor families in exchange for increasing the amount the government can borrow.

Markets are now fully pricing in a timely resolution of the crisis, ACY Securities’ Clifford Bennett said in a report. Nobody wants to sell before a deal is announced.”

In early trading, the FTSE in London was up 0.7% to 7,776.24. The DAX in Frankfurt gained 1.5% to 16,187.47 and the CAC 40 in Paris rose 0.9% to 7,468.73.

On Wall Street, futures for the benchmark S&P 500 index and the Dow Jones Industrial Average rose 0.1%.

On Wednesday, the S&P 500 and the Dow both rose 1.2%. The Nasdaq composite gained 1.3%.

Shares of companies that derive a large portion of their revenue from the federal government rose. Military contractor Lockheed Martin climbed 2.1%. Northrop Grumman won 2.7%.

Speaker Kevin McCarthy of the House of Representatives said on Tuesday that the two sides are far apart but could reach an agreement by the end of the week. The US government will run out of money if it does not agree to raise its borrowing limit by June 1.

Any disruption to the borrowing and paying of debt by the US government could send a shock wave through the global financial system. Treasury debt is considered the world’s safest asset and influences the price of private sector loans.

In Asia, the Shanghai Composite Index gained 0.4% to 3,297.31 and the Nikkei 225 in Tokyo rose 1.6% to 30,573.93. The Hang Seng in Hong Kong rose 0.9% to 19,727.25.

The Kospi in Seoul was up 0.8% at 2,515.40 and the S&P ASX 200 in Sydney was up 0.5% at 7,236.80.

The Indian Sensex rose less than 0.1% to 61.57.39. The markets in New Zealand and Southeast Asia also increased.

In Washington, lawmakers and the White House are arguing over Republican demands for spending cuts, curbing spending growth or job requirements for programs that help poor families pay for food, rent and medical care. The Republican plan would also block Biden’s proposal to cancel some student debt and revoke tax cuts to promote clean energy use and combat climate change.

Traders expected at least a brief recession in the US this year following interest rate hikes to contain stubbornly high inflation by cooling activity.

Investors are also concerned about the health of global banks after three high-profile bankruptcies in the United States and one in Switzerland. Banks have come under pressure from the unexpectedly rapid rise in interest rates, which has driven down market prices of bonds on their books.

On Wednesday, Western Alliance Bancorp recovered some of its losses after providing an update on its deposit levels. It’s up 10.2%, but is still down 41.6% for the year.

PacWest Bancorp, another bank under heavy scrutiny, rose 21.7% to cut its loss for the year to about 75.8%.

In energy markets, benchmark US crude lost 33 cents to $72.50 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.97 to $72.83 on Wednesday. Brent oil, the price base for international oil trade, fell 38 cents to $76.58 a barrel in London. It gained $2.05 to $76.96 the previous session.

The dollar rose from 137.61 yen on Wednesday to 137.75 yen. The euro fell from $1.0838 to $1.0815.