Stocks in Europe and Asia rose in response to an increase in the debt ceiling approved by lawmakers in the US.
Shares in Europe opened with gains today after the US Senate approved a bill To suspend the debt limit of the Govt. After a 63-36 vote, US lawmakers agreed to raise the debt ceiling to prevent the country’s first debt default. Congress has now sent approval to the President Joe Biden to consent.
As of 9:30 a.m. London time this morning, the STOXX Europe 600 was up 0.7% after hitting its lowest point in two months just days earlier. Oil and gas also gained 1.3%, while mining stocks gained 2.6%. In addition, France’s CAC40 and Germany’s DAX both rose 0.7%. So far, reactions to the suspension of the debt limit have been favorable, even though the votes in the House of Representatives and Senate were not overwhelming victories.
Inflation fears mount even as Europe stocks climb after debt ceiling approved
Despite the current environment in Europe’s stock market, the Eurozone is still struggling with inflation. Though there is some relief in this regard, the officials are not convinced. yesterday, flash data revealed That Eurozone headline inflation fell from 7% in April to 6.1% in May, its lowest point since February 2022. Economists had expected May to end at 6.3%.
Apart from the decline in headline inflation, core inflation minus food and energy also fell to 5.3% from 5.6% in April. Regardless, Christine Lagarde, president of the European Central Bank (ECB), is unperturbed. According to him, inflation is still very high and is likely to remain so for some time. However, she said the ECB would continue to work to bring the region’s inflation down to 2%.
were laggards Speaking At the Deutscher Sparkassentag 2023 conference when he revealed the ECB’s position on inflation. According to him, the apex bank cannot stop the hike in interest rates for now. Lagarde said the ECB “will continue our hiking cycle until we are sufficiently convinced that inflation is on track to return to our target in time.” Nevertheless, he assured that the ECB is mindful of the effects of monetary policies on the economy.
Shares in Europe also opened higher last week after the US House of Representatives passed a debt limit vote and sent it to the Senate. After the vote, 314 to 117, the Stoxx 600 surged. Germany’s DAX and France’s CAC40 also rose 0.5%.
other financial markets
Away from the rise in Europe’s shares, other financial markets are reacting positively to the debt limit approval. In Asia, China’s CSI 200 index climbed 1.4%, while South Korea’s Kospi climbed 1.3%. In addition, Japan’s Topix gained 1.6%, no match for Hong Kong’s Hang Seng index’s 3.9% rise.
In the US, the market will be awaiting the official unemployment report, which should show non-farm payrolls increased by 190,000 last month. Moreover, the chances of another rate hike this month are slim. Fed officials may hold off on raising rates again until next month.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to strip crypto stories down to the basics so that anyone anywhere can understand without a lot of background knowledge. When he is not delving deep into crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
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