European stock markets were higher in pre-trade amid a congressional vote on a proposed US debt ceiling bill.
european market more open On Monday after the US debt ceiling agreement between Pres. Joe Biden and House Speaker Kevin McCarthy. Over the weekend, two high-ranking politicians finally agreed to raise the US debt ceiling to prevent default. In light of the deal, Biden and McCarthy are now trying to persuade Congress to approve implementation in the coming weeks.
European markets react positively to US debt limit development after volatile week
The development of the US debt ceiling saw European stock markets including Germany’s DAX and France’s CAC40 up 0.5% in pre-trade. All sectors were marginally higher with auto and banks at the forefront of gains. The jump in European markets also follows a turbulent week, where the Stoxx 600 index hit an 8-week low before paring some losses on Friday. The pan-European index closed 1.2% higher on May 26 after three negative sessions, which saw it fall to its lowest level since early April.
On Friday, all sectors closed in positive territory, with tech stocks following NVIDIA(NASDAQ: NVDA) stellar operating outlook.
UK markets are closed today for a bank holiday, while US markets are closed for Memorial Day.
Receipts from Credit Line Development
on Friday, US Treasury yields fell As investors awaited an update on debt ceiling talks and the release of key inflation data. However, after successful debt ceiling talks between US political leaders, Republican and Democratic lawmakers must now vote to support the new bill. Biden and McCarthy’s proposed measure must secure enough bipartisan congressional support before the June 5 deadline to avoid a possible government default for the first time.
However, reports suggest the US House of Representatives could vote as soon as Wednesday, with the upper house later this week. With debt-limit negotiators quickly drafting the bill’s wording, Biden expressed relief at the conclusion agreed between himself and McCarthy. On Sunday evening at the White House, the Democratic US President, along with a Republican speaker, described the result as “good news”. In addition, Biden added late yesterday:
“The [debt-ceiling] The compromise prevents the worst possible crisis, a lapse, for the first time in our nation’s history. Takes the risk of a catastrophic default off the table.
The US President also urged both the parties in the legislature to come together for speedy passage of the bill. Biden said, “The speaker and I made it clear from the beginning that a bipartisan agreement was the only way forward.”
A lot is at stake with US debt ceiling bill voting session
The debt-limit compromise proposes spending cuts but could alienate some lawmakers as they oversimplify the bill’s built-in concessions. However, Biden is confident the bill will secure the votes needed to see implementation. McCarthy also expressed optimism on the outcome of the voting process, saying,[ultimately] People can see it together to be able to pass”.
A US debt default could freeze already compromised financial markets and trigger a global financial crisis. If this happens, analysts predict widespread destruction, including skyrocketing unemployment and credit rates and a collapse in the stock market. Besides this, analysts also say that a default could impact the treasury debt market and erode household wealth.
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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