By Stella Qiu
SYDNEY (Reuters) – Asian stocks and U.S. equity futures rose on Monday, buoyed by a weekend agreement between U.S. President Joe Biden and Congressional Republican Kevin McCarthy to suspend the government’s debt ceiling , ending a months-long stalemate and investor angst.
After weeks of negotiations, McCarthy and Biden reached a deal late Saturday to avoid an economically destabilizing default to suspend the $31.4 trillion debt ceiling until 2025. The deal will now have to go through Congress tightly split.
The positive news sent S&P 500 futures up 0.4% in early trading, while Nasdaq futures firmed 0.6%. The Nikkei jumped 1.9% to a new 33-year high and Australian resource-heavy stocks gained 0.6%.
MSCI’s broadest index of Asia-Pacific stocks outside Japan rose 0.3%.
“Asian markets should start the week off right, but for US equity markets…futures opened stronger this morning, but we need to see the deal pass for the next leg higher,” Tony said. Sycamore, market analyst at IG.
“Yes, we will get the short-term relief rally, but then we have to start thinking about the June FOMC meeting, more rigid than expected inflation and money flowing out of the (stock) markets. “
Cash U.S. Treasuries were off trade in Asia on Monday due to the Memorial Day holiday, while futures were broadly flat. The implied yield on the ten-year futures was 3.84%.
On Friday, the Federal Reserve’s favorite gauge of inflation – the personal consumption expenditure (PCE) price index – came in stronger than expected, with markets now leaning towards a quarter-point rise from the Fed next month and seeing rates stay there for the rest of the year.
In Turkey, the lira hovered at 20.04 against the dollar, just a touch above its record low of 20.06 hit on Friday, after President Tayyip Erdogan claimed victory in the country’s presidential election , extending his increasingly authoritarian rule for a third decade.
Elsewhere in the currency markets, the dollar index – a measure of the greenback against its major peers – was solidly placed at 104.26, close to a two-month high hit on Friday.
The yen fell to a fresh six-month low at 140.89 per dollar in early trading, the euro suffered losses around a two-month low at $1.0721 and the Aussie wobbled at $0.6527, just a touch above a six-month low hit on Friday.
Oil prices rose early Monday. Brent crude futures climbed 39 cents, or 0.5%, to $77.34 a barrel, while U.S. West Texas Intermediate crude was at $73.12 a barrel, up 45 cents , or 0.6%.
The price of gold was down 0.1% at $1,943.69 an ounce.
(Edited by Shri Navaratnam)