Stocks Skittish As US Debt Talks Continue

Wall Street stocks failed to gain traction Monday after President Joe Biden said he was "optimistic" about finding an agreement on averting a first-ever US default

London, (UrduPoint / Pakistan Point News - 15th May, 2023 ):Wall Street stocks failed to gain traction Monday after President Joe Biden said he was "optimistic" about finding an agreement on averting a first-ever US default.

Traders reacted also to a mixed inflation picture out of Europe and weekend elections in Thailand and Turkey.

Asian stock markets kicked the week off with gains amid "growing hopes that the Democrats and Republicans will reach a deal to avert the disastrous scenario of a government default" in the world's biggest economy, said Victoria Scholar, head of investment at Interactive Investor.

Biden said Sunday that "I really think there's a desire on their part as well as ours to reach agreement" ahead of fresh talks this week with Republican leaders, including House Speaker Kevin McCarthy.

Officials said the US government could run out of measures to avoid a default by early June.

But investor enthusiasm petered out as the open of trading on Wall Street approached, with most European markets falling in the red after starting the day in the green.

The Dow edged higher at the opening bell, but then sank into the red.

Sentiment was dented after a key manufacturing survey showed a sharp drop in activity. The drop in the New York Fed Empire State Manufacturing Survey from 10.8 in to -31.8 points in May. The figure was much worse than expected and indicates a contraction.

"This is the the type of data that should give the Fed some pause about raising rates further," said Briefing.com analyst Patrick O'Hare.

The US Federal Reserve has repeatedly raised interest rates to tame high inflation, but has indicated it may pause to wait to see their impact on the economy.

Elsewhere, European gas prices reached the lowest levels in almost two years as concerns about tight supplies continued to ease heading into the summer.

On currency markets, the Thai baht rallied as pro-democracy parties looked set to win weekend general elections, with voters delivering a clear rejection of nearly a decade of military-backed government.

The progressive Move Forward Party claimed victory Monday, while the Pheu Thai party agreed to join a coalition government.

However, stocks in Bangkok fell.

The Turkish lira edged down, reversing earlier gains, as the country looked set for a presidential election runoff.

President Recep Tayyip Erdogan will face opposition candidate Kemal Kilicdaroglu again in a second round on May 28 if neither candidate achieves the 50 percent needed to win.

"If these results hold, it would be one of the worst outcomes for the markets," said Ogeday Topcular, a money manager at RAM Capital SA.

"There will be (no clarity) for the next two weeks." In Brussels, the European Commission boosted its 2023 economic growth outlook for the eurozone -- but also raised the inflation forecast for the single currency area.

"The European economy is in better shape than we projected last autumn," said the EU commissioner for the economy, Paolo Gentiloni, said.

"Thanks to determined efforts to strengthen our energy security, a remarkably resilient labour market and easing supply constraints, we avoided a winter recession and are set for moderate growth this year and next." Outside the eurozone, Sweden's inflation slowed more than expected in April, official data showed Monday, possibly giving the country's central bank room to pause its rate-hike campaign.

- Key figures around 1330 GMT - New York - Dow: UP less than 0.1 percent at 33,318.41 points London - FTSE 100: UP 0.2 percent at 7,772.63 Frankfurt - DAX: DOWN 0.1 percent at 15,895.38 Paris - CAC 40: DOWN less than 0.1 percent at 7,409.88 EURO STOXX 50: DOWN 0.2 percent at 4,308.87 Tokyo - Nikkei 225: UP 0.8 percent at 29,626.34 (close) Hong Kong - Hang Seng Index: UP 1.8 percent at 19,971.13 (close) Shanghai - Composite: UP 1.2 percent at 3,310.74 (close) Euro/dollar: UP at $1.0879 from $1.0853 on Friday Pound/dollar: UP at $1.2508 from $1.2451 Dollar/yen: UP at 136.13 yen from 135.69 yen Euro/pound: DOWN at 86.96 pence from 87.14 penceBrent North Sea crude: UP 0.9 percent at $74.87 per barrelWest Texas Intermediate: UP 0.9 percent at $70.70 per barrel