European stocks rose on optimism over US debt ceiling talks -Dlight News

European stocks rose on optimism over US debt ceiling talks

European stocks rose on Friday, on the tail end of a Wall Street rally around chipmaker earnings, as investors awaited further signs of progress in US debt ceiling talks.

Europe’s region-wide Stoxx 600 rose 0.3 percent, while France’s Cac 50 and London’s FTSE 100 both added 0.2 percent. Germany’s deck was flat.

Contracts tracking Wall Street’s benchmark S&P 500 and the tech-heavy Nasdaq 100 advanced 0.3 percent at the New York open.

Investors were watching developments in Washington, where policymakers signaled they were moving toward a deal to raise the U.S. debt ceiling before a June deadline to avoid an unprecedented government default.

“Even in politics, if markets start to sell off as we get closer to the deadline, clearly politicians will start to change behaviour,” said ML van den Heligenberg, head of asset allocation at LGIM.

Pressure on government bonds eased slightly. The yield on the policy-sensitive two-year bill fell 0.03 percent to 4.49 percent. The yield on the benchmark 10-year note fell 0.03 percentage points to 3.78 percent. As prices rise, bond yields fall.

The yield on Treasuries maturing in one month — closer to the date the U.S. government can run out of money — was 5.7 percent on Friday, down from a high of 6.01 percent earlier in the week.

The dollar fell 0.3 percent against a basket of six other currencies.

The moves come a day after Nvidia fueled a market rally after announcing better-than-expected quarterly earnings driven by increased demand for chips used in generative artificial intelligence systems.

Nvidia shares jumped 24 percent on the day, making the company the first chipmaker to be valued at more than $1tn. The rally spread to other AI-related stocks, helping the tech-heavy Nasdaq Composite finish 1.7 percent higher. The benchmark S&P 500 rose 0.9 percent.

“The performance of the equity market is very narrow. Only technology stocks are performing — except for those technology stocks, the S&P is flat,” van den Heiligenberg said.

“It’s no different than 1995, when people started talking about the potential of the Internet. . . . Slowly but surely it becomes a career risk to ignore this. If you don’t have technology in your equity portfolio, you’re really going to miss structural moves in the markets, ” he added.

Turkey’s lira tumbled to 20 against the US dollar for the first time, in the latest sign of mounting pressure on the country’s economy ahead of Sunday’s election. President Recep Tayyip Erdogan, who has led Turkey for two decades, is expected to win this week’s second round of voting.

Oil prices rose following mixed messages from OPEC+ member countries on future fuel production. International benchmark Brent crude rose 0.35 percent to $76.53 a barrel, while US counterpart West Texas Intermediate rose 0.6 percent to $72.26.

Russian President Vladimir Putin and the country’s deputy prime minister said further production cuts were unlikely at next month’s OPEC+ meeting.

Hong Kong’s Hang Seng index fell 1.9 percent while China’s CSI was flat.