Debt Ceiling and the EU 📈

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Debt Ceiling and the EU

European stocks surged on Friday following positive developments in the United States. Investor confidence was boosted by the US Congress passing a deal to raise the country’s debt ceiling, averting a potential default, and Federal Reserve officials indicated that they would pause interest rate hikes. The region wide Stoxx 600 index rose by 0.5%, building on gains from the previous day. France’s CAC 40 and Germany’s DAX also recorded notable increases of 0.7% each in morning trading. The US Senate’s approval of the debt ceiling deal, reached between the White House and congressional Republicans, ended a prolonged political standoff that had threatened to trigger a severe debt default in the world’s largest economy. The positive news also pushed the benchmark S&P 500 to a nine-month high. With the resolution of this issue, investors turned their attention towards economic data and fundamental factors, as noted by Georgios Leontaris, Chief Investment Officer for Europe, the Middle East, and Africa at HSBC Global Private Banking.

The positive sentiment spread across Asian markets as well. Hong Kong’s Hang Seng index led the region with a significant rise of 3.9%, while China’s CSI 300 index climbed 1.4%. South Korea’s KOSPI and Japan’s TOPIX also experienced gains of 1.3% and 1.6%, respectively. Market participants closely awaited the release of the US unemployment report, which would provide insight into the Federal Reserve’s monetary policy direction. According to Reuters’ consensus estimates, analysts expected non-farm payrolls to have increased by 190,000 in May.

What do you think about the situation with the debt ceiling? And what will happen with European stocks?

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