Asian markets turned mostly higher Friday amid signs that Congress may reach a deal on the U.S. government debt that would forestall a potentially calamitous default.
U.S. futures and oil prices also advanced.
President Joe Biden and House Speaker Kevin McCarthy were narrowing in on a two-year budget deal that could unlock a vote for lifting the nation’s debt ceiling. The Democratic president and Republican speaker hope to strike a budget compromise this weekend.
Biden and McCarthy both expressed optimism heading into the weekend that the gulf between their positions could be bridged. A two-year deal would raise the debt limit for that time, past the 2024 presidential election. As their price for raising the legal debt limit, Republicans have been demanding spending cuts the Democrats oppose.
Markets have been whirling from various factors, and on Thursday, enthusiasm over artificial intelligence pushed share prices higher despite the potential crisis brewing in Washington.
That carried over into Asia, where Tokyo's Nikkei 225 gained 0.7% to 31,019.61. In Seoul, the Kospi climbed 0.2% to 2,558.81, helped by a 2.2% rise in the share price for Samsung Electronics, South Korea's biggest company.
The Shanghai Composite index added 0.4% to 3,212.50, while the S&P/ASX 200 in Sydney also was 0.2% higher, at 7,154.80.
On Thursday, the S&P 500 rallied 0.9% to 4,151.28 after chipmaker Nvidia gave a monster forecast for upcoming sales as it benefits from the tech world’s rush into AI.
The Nasdaq leaped 1.7% to 12,698.09, while the Dow Jones Industrial Average slipped 0.1% to 32,764.65.
Because it’s one of Wall Street’s most valuable stocks, Nvidia’s 24.4% surge was the strongest force pushing upward on the S&P 500. Its forecast of roughly $11 billion in revenue for the current quarter blew past analysts’ expectations for less than $7.2 billion. Nvidia’s stock has already more than doubled this year, and its total value is approaching $1 trillion.
Stocks of other chip makers also charged higher after Nvidia described a race by its customers to put AI “into every product, service and business process.” Advanced Micro Devices gained 11.2%.
Some other Big Tech stocks rallied, adding to recent gains fueled by excitement about AI. The field has become so hot that critics warn of a possible bubble, while supporters say it could be the latest revolution to reshape the global economy. Microsoft gained 3.8%, and Google’s parent company, Alphabet, rose 2.1%.
“Although no one questions the potential of AI, the valuations seem to have gone ahead of themselves and it could soon be time for correction,” Ipek Ozkardeskaya of Swissquote said in a commentary.
The majority of stocks fell on worries that Washington could run out of cash to pay its bills as soon as June 1, unless Congress allows it to borrow more.
The widespread expectation is for a compromise before it’s too late, as has happened dozens of times before, because a failure would likely be awful for the economy.
Fitch said late Wednesday that it could downgrade the U.S. government’s “AAA” credit rating. It said it still expects a resolution before the U.S. Treasury runs out of cash, but it sees the risk of a mistake having risen.
A report said fewer workers applied for unemployment benefits last week than expected, suggesting the job market remains strong even as manufacturing, housing and other areas of the economy slow under the weight of much higher interest rates.
Another report estimated the U.S. economy grew at a 1.3% annual pace in the first three months of the year, stronger than the 1.1% earlier thought. That provides reassurance the economy might not fall into recession. But it might lead the Federal Reserve to raise interest rates again next month. Rates have been raised rapidly for the past year, helping to slow inflation to slow from its peak last summer, but they slow the entire economy and drag on prices for stocks, bonds and other investments.
In other trading, benchmark U.S. crude oil reversed an early retreat, picking up 20 cents to $72.03 per barrel in electronic trading on the New York Mercantile Exchange. It sank $2.51 on Thursday to $71.83 per barrel.
Brent crude, the international standard, rose 11 cents to $76.29 per barrel.
The U.S. dollar fell to 139.74 Japanese yen from 140.07 yen. The euro rose to $1.0732 from $1.0726.© Copyright 2023 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.
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pathetic comedy.of course there will be no default at all...just games for masses and some excitement for some others...
Why worry they will share in the upcoming misery,when bank lose the ability to sell their bond to Treasury Repo Market and people start a run on their banks, because of lack funds from the Government ,that have to withdraw saving to stay liquid
U.S. futures and crude oil prices also rose. President Joe Biden and House Speaker Kevin McCarthy had narrowed down a two-year budget deal that could lift the vote to lift the country's debt ceiling. Biden and McCarthy have expressed that they can bridge the gap between their positions. The two-year contract will be raised. In exchange for raising the legal debt limit, Republicans have demanded spending cuts that Democrats oppose.One comment said that banks have lost the ability to sell bonds on the government bond repo market and that people are running on banks because of the lack of money from the government. I wondered why they should be worried about sharing their misery ahead when they have to draw down savings to maintain liquidity．
Kaw,if people started causing bank to fail, something will be done immediately, Biden should immediately go on TV and let American know the consequences,banks become insolvent,and an infusion of cash overnight from the government is the only make them liquid again
Just scrap that stupid debt ceiling legislation.