{"id":13365,"date":"2023-05-24T21:59:44","date_gmt":"2023-05-25T01:59:44","guid":{"rendered":"https:\/\/ifintechworld.com\/uncategorized\/stalled-us-debt-talks-inflation-woes-hit-stocks\/"},"modified":"2023-05-24T21:59:47","modified_gmt":"2023-05-25T01:59:47","slug":"stalled-us-debt-talks-inflation-woes-hit-stocks","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=13365","title":{"rendered":"Stalled US debt talks, inflation woes hit stocks"},"content":{"rendered":"
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\u00a9 Reuters. FILE PHOTO: A man walks past a screen displaying the Hang Seng Index at Central district, in Hong Kong, China March 21, 2023. REUTERS\/Tyrone Siu<\/span>
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By Lawrence White and Koh Gui Qing<\/p>\n

LONDON\/NEW YORK (Reuters) -World stocks dropped on Wednesday as U.S. debt ceiling talks dragged on without resolution, stoking a general malaise in markets that saw safe-haven assets such as the dollar hold around recent highs.<\/p>\n

But prices bucked the downtrend and kept rising, after a warning from the Saudi energy minister to speculators that raised the prospect of further OPEC+ output cuts.<\/p>\n

Negotiators for Democratic President Joe Biden and top congressional Republican Kevin McCarthy met again on Wednesday to end an impasse in talks.<\/p>\n

McCarthy said earlier on Wednesday that while there are still differences between Democrats and Republicans over spending, he believed that a deal could be made.<\/p>\n

Time is running short for a resolution, and the Treasury Department has warned that the federal government could be unable to pay all its bills by as soon as June 1 – just eight days away – and it would take several days to pass legislation through the narrowly divided Congress.<\/p>\n

The U.S. ended down 0.73% by mid-day, the lost 0.77%, and the dropped 0.61%. That helped to drag the MSCI world equity index, which tracks shares in 49 nations, down 1.01%.<\/p>\n

“Equity markets are now beginning to fret about the debt ceiling debate,” said Nicholas Colas, co-founder of DataTrek Research. “T-bills were way ahead on this call, and they are not yet signalling an all-clear.”<\/p>\n

Yields on one-month bills, which are being shunned on concerns about payments coming due when the Treasury is most at risk of running out of money, hovered near a record high of 5.8005%.<\/p>\n

Benchmark 10-year U.S. Treasury yields, meanwhile, edged down to 3.7361%.<\/p>\n

The , which measures the currency against six major peers, rose 0.33% to 103.89, nudging further above a two-month high of 103.63 reached last week. [USD\/] <\/p>\n

The New Zealand dollar dropped 2.3% after the Reserve Bank wrong-footed markets by keeping its forecast for the terminal rate at 5.5%, having hiked by a quarter point to that level.<\/p>\n

Europe’s benchmark STOXX index fell 1.8% to a 1-1\/2-month low, as a jump in UK core inflation and more losses in market-heavy luxury names hurt risk sentiment. <\/p>\n

British homebuilders led declines on the after data showed a closely watched core measure of UK price growth surged to a 31-year high in April, cementing bets of more interest rate hikes from the Bank of England.<\/p>\n

Europe’s luxury stocks fell 1.7% to a seven-week low as a sell-off in the sector continued. <\/p>\n

MSCI’s broadest index of Asia-Pacific shares fell 1.1%.<\/p>\n

DEBT CEILING DOLDRUMS<\/p>\n

Treasury Secretary Janet Yellen said on Wednesday that Biden had offered changes that would result in a $1 trillion reduction in the U.S. deficit, and that there would be some obligations that the U.S. government would be unable to pay if the debt ceiling was not raised.<\/p>\n

While the risk of a default that could precipitate a recession is bad for the United States, investors worried about the repercussions for the global economy have turned away from riskier assets. <\/p>\n

Reports that Treasury has asked federal agencies whether they can delay upcoming payments added to the sense of crisis.<\/p>\n

“Payment prioritisation is now real,” Chris Weston, head of research at brokerage Pepperstone in Melbourne, wrote in a client note.<\/p>\n

“And while it seems highly prudent to have this conversation, the market’s anxiety levels have heated up consequently,” he said. “The market is starting to de-risk.”<\/p>\n

BRITAIN: INFLATION NATION<\/p>\n

Euro zone bond yields rose after British inflation data came in stronger than expected, a reminder to investors that the global fight against price rises is far from over.<\/p>\n

Germany’s 10-year bond yield, the benchmark for the euro zone, retreated from a one-month high of 2.501% struck earlier in the day.<\/p>\n

In commodities, gold fell 0.8% to $1,958.8, dragged in part by a firmer dollar.<\/p>\n

Interest rate hikes raise the opportunity cost of holding non-interest-bearing gold.<\/p>\n

Crude oil price extended gains from Tuesday, when Saudi Energy Minister Prince Abdulaziz bin Salman warned speculators to “watch out”, saying “they will be ouching”.<\/p>\n

futures rose more than a dollar to $78.36 a barrel, while U.S. West Texas Intermediate crude (WTI) likewise closed up $1.43 at $74.34 a barrel.<\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

\u00a9 Reuters. FILE PHOTO: A man walks past a screen displaying the Hang Seng Index at Central district, in Hong Kong, China March 21, 2023. REUTERS\/Tyrone Siu By Lawrence White and Koh Gui Qing LONDON\/NEW YORK (Reuters) -World stocks dropped on Wednesday as U.S. debt ceiling talks dragged on without resolution, stoking a general malaise […]<\/p>\n","protected":false},"author":1,"featured_media":800,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[1],"tags":[83],"class_list":["post-13365","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-uncategorized","tag-featured","post_format-post-format-video"],"yoast_head":"\nStalled US debt talks, inflation woes hit stocks | iFintechWorld<\/title>\n<meta name=\"description\" content=\"\u00a9 Reuters. 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