Global markets were mixed on Monday after a preliminary agreement to raise the US debt ceiling emerged over the weekend from negotiations between the White House and Republican negotiators.
After President Joe Biden and House Speaker Kevin McCarthy (R, Calif.) reached the deal on Saturday, the text was released Sunday evening in a bid to build support on both sides of the political aisle , despite continued opposition from some U.S. lawmakers. Congressional votes on the deal could come as early as Wednesday in the House.
US markets are closed Monday for the federal Memorial Day holiday. Investors appeared to be holding their positions in safe-haven assets with spot gold prices broadly stable, while the US dollar index was up less than 0.1%, reversing early losses.
“Although the dollar took a breather on Friday and early today, the weekend consensus is nothing but a positive development as it lessens concerns about economic instability and thus allows investors to ‘add to bets on a summer Fed hike,” Charalampos Pissouros, an investment analyst at XM, wrote in a research note on Monday.
Asian markets rose significantly on Monday, led by a 1.0% rise in Japan’s Nikkei 225 index. However, Chinese markets lagged with Hong Kong’s Hang Seng index down 1.0%.
In Europe, the Stoxx Europe 600 index was down 0.2%. Spain’s IBEX 35 fell 0.3% after Prime Minister Pedro Sanchez called a snap national election in late July, a day after his Socialist Party suffered heavy losses in regional and local elections.
The Turkish lira fell to a new all-time high against the dollar after Turkish President Recep Tayyip Erdogan claimed victory in the second round of Sunday’s presidential election, extending his term by five years. Erdogan has adopted a controversial policy of keeping interest rates low in order to fight high inflation. The dollar rose 0.6% to 20.09 lira.
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