Asian shares were mostly higher early Monday after President Joe Biden and House Speaker Kevin McCarthy reached a final agreement on a deal to raise the U.S. national debt ceiling.
Tokyo’s Nikkei 225 index
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Markets in Seoul were closed for a holiday.
U.S. markets will be closed for a holiday on Monday. Investors have another busy week of U.S. economic updates ahead, including data on consumer confidence and employment.
The agreement on the U.S. debt eased what had been a potentially huge threat to markets worldwide. Biden and McCarthy worked over the weekend to ensure enough support in Congress to pass the measure before a June 5 deadline and avert a disruptive federal default.
“Markets are so far reacting cautiously. Buoyed, but cautious,” Clifford Bennett, chief economist at ACY Securities, said in a commentary.
“This agreement merely rolls the issue to potentially more politically friendly times post the Presidential election in two years. Nothing is certain in this regard, and it is possible resolution will be even more difficult then, than it has been on this occasion,” Bennett said.
On Friday, technology stocks powered solid gains for Wall Street after chipmaker Marvell Technology
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The upbeat finish to the week for major U.S. indexes comes amid lingering anxiety over persistently high inflation and broadly weak corporate earnings.
The S&P 500
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The revolutionary AI field has become a hot issue. Critics warn that it is a potential bubble, but supporters supporters say it could be the latest revolution to reshape the global economy. The nation’s financial watchdog, the Consumer Finance Protection Bureau, said it’s working to ensure that companies follow the law when they’re using AI.
Wall Street and the broader economy already had a full roster of concerns before the threat of the U.S. defaulting on its debt became sharply highlighted on the list.
A key measure of inflation that is closely watched by the Federal Reserve ticked higher than economists expected in April.
The persistent pressure from inflation complicates the Fed’s fight against high prices. The central bank has been aggressively raising interest rates since 2022, but recently signaled it will likely forgo a rate hike when it meets in mid-June. The latest government report on inflation is raising concerns about the Fed’s next move.
The latest inflation data also highlighted the continued resilience of consumer spending, which has been a key bulwark, along with the strong jobs market, against a recession. The economy grew at a sluggish 1.3% annual rate from January through March and it is projected to accelerate to a 2% pace in the current April-June quarter.
The impact from inflation and worries about a recession on the horizon have been hitting corporate profits and forecasts. The latest round of company earnings is nearing a close with the profits for companies in the S&P 500 contracting about 2%.
In other trading Monday, U.S. benchmark crude oil
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The dollar
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