Posted on Thursday, October 7, 2021 | 6:43 a.m.
Updated 22 minutes ago
Stocks open higher on Wall Street Thursday amid signs that a deadlock in Congress over the federal debt ceiling is closer to a resolution. Investors are hoping Congress can temporarily extend the federal government’s debt ceiling and give lawmakers time to reach a permanent resolution. The S&P 500 rose 1.1% at the start of the session and the Nasdaq Composite gained 1.2%. Pfizer gained 1.3% after asking the U.S. government to allow its COVID-19 vaccine to be used in children aged 5 to 11. The number of Americans claiming unemployment benefits fell last week as the labor market continued to recover steadily.
(asterisk) (asterisk) THIS IS A BREAKING NEWS UPDATE (asterisk) (asterisk) The previous story from AP appears below:
Global stocks rose Thursday, following a rally on Wall Street boosted by signs of progress in resolving the deadlock in Congress over the federal debt ceiling.
The French CAC 40 gained 1.1% at the start of the session to 6,567.22, while the German DAX rose 1.1% to 15,143.67. The UK FTSE 100 rose 0.8% to 7,051.44. Dow Industrials Futures gained 0.4% to 34,438.00. That of the S&P 500 rose 0.6% to 4,379.50.
Investors are hopeful that the US Congress will manage to temporarily extend the federal government’s debt ceiling and give lawmakers time to reach a more permanent resolution. The market recovered from a morning loss on Wednesday shortly after Republican Senate Leader Mitch McConnell offered Democrats a short-term emergency extension of the federal debt ceiling until December.
If the country’s debt ceiling, which caps the amount of money the federal government can borrow, is not raised by October 18, the country “would likely face a financial crisis and economic recession.” Treasury Secretary Janet Yellen told Congress last week.
An agreement in principle between the American and Chinese envoys on a virtual meeting between President Joe Biden and his Chinese counterpart Xi Jinping also brightened the mood.
Any progress, however small, towards easing tensions between the two largest economies would alleviate some of the uncertainty in the markets.
Markets rebounded as investors question the way forward for the economy, amid rising inflation and the continued impact of the virus pandemic.
Japan’s benchmark Nikkei 225 gained 0.5% to close at 27,678.21. The Australian S & P / ASX 200 added 0.7% to 7,256.70. South Korea’s Kospi jumped 1.8% to 2,959.46. Hong Kong’s Hang Seng jumped 3.1% to 24,701.73. The trade was closed in Shanghai for a Chinese national holiday.
Stephen Schwartz, senior director of Fitch, said he believes the regional economy will start to recover with growing vaccination efforts in Asia, which will lead to restrictions being lifted to curb the spread of the coronavirus.
But South and Southeast Asia, where vaccination deployment has been delayed, remains vulnerable to the “pandemic setbacks” of COVID-19. The recent problems in China’s real estate sector are another risk, he added.
“The slowdown in growth in China, along with the expected reduction from the US Fed, could have broader negative repercussions, especially for emerging and frontier markets in the region,” he said.
Japan’s economic outlook also remains bleak as new Prime Minister Fumio Kishida delivers his first political speech later this week. Although he has promised to raise revenues, he did not give details and is not widely seen as a supporter of the regulatory and structural changes that analysts have long said Japan badly needed. Some skeptics fear that any new spending will only push the country into further debt.
Another concern is the Federal Reserve’s timing for raising interest rates. The Fed’s policy-making committee recently signaled that the central bank may start raising rates at the end of next year. Analysts said the Fed could act sooner than expected if high inflation persists.
Investors will take a closer look at how companies perform in the third quarter when quarterly financial results are released in the coming weeks. Wall Street expects strong earnings growth of 27% for S&P 500 companies, but will also be listening to comments on how supply chain issues and higher costs are hampering operations.
On Friday, the Ministry of Labor will release its report on employment scheduled for September. The labor market has been slow to fully recover from the pandemic, and the summer upsurge in COVID-19 cases has further hampered its progress.
In energy trading, benchmark US crude slipped from $ 1.76 to $ 75.67 a barrel in electronic trading on the New York Mercantile Exchange. It sold $ 1.50 to $ 77.43 a barrel on Wednesday. Brent crude, the international standard, fell from $ 1.33 to $ 79.75 a barrel.
In currency trading, the US dollar rose from 111.41 yen to $ 111.44. The euro went from $ 1.1557 to $ 1.1558.