European stocks gain as investor optimism grows on US debt

Featured Sponsor

Store	Link	Sample Product
UK Artful Impressions	Premiere Etsy Store

European stocks rallied on Thursday, joining an overnight rally on Wall Street as fears about a potential US government default and the health of regional banks eased.

Europe’s Stoxx 600 was up 0.4%, recovering after two days of losses, while France’s Cac 40 was up 0.6% and Germany’s Dax was up 1%. London’s FTSE 100 rose 0.5%.

The Wall Street benchmark S&P 500 gained 1.2% in previous sessions and the Nasdaq Composite closed up 1.3% after US President Joe Biden She said he was “confident” of reaching a budget deal with Congress to avoid a default on US debt.

“The market has mostly priced in a successful debt ceiling deal,” said Mike Zigmont, head of research and trading at Harvest Volatility, noting that “there won’t be much market movement, from these levels, when the deal will be announced as official.”

Meanwhile, the regional KBW banking The index gained 7.3% on Wednesday as investors gained confidence in the health of the sector after lender Western Alliance reported earlier in the week that its deposits grew by $2 billion in the second quarter.

The yield on interest rate sensitive two-year Treasuries increased by 0.01 percentage point to 4.16%. The yield on the 10-year benchmark note remained stable at 3.58%. Bond yields rise when prices fall.

The dollar index, which tracks the currency against a basket of six pars, gained 0.1%.

“The strength of the dollar [ . . . ] signals that FX markets appear to be lagging behind the cautious optimism shown in other asset classes such as equities,” said Francesco Pesole, currency strategist at ING.

International oil benchmark Brent fell 0.4% to $76.7 a barrel, while its US equivalent West Texas Intermediate fell 0.4% to $72.5 a barrel.

US futures were flat ahead of the New York open as traders awaited US data on initial jobless claims and existing home sales, which could show how consumers are fared under the weight of higher prices and high borrowing costs.

Asian stocks also rose, boosted by momentum from Wall Street. Hong Kong’s Hang Seng index gained 0.6% and Japan’s Topix rose 1.1%.

China’s CSI 300 was the outlier, down 0.1%, extending its losses from earlier in the week when official data pointed to a slowdown in the country’s post-Covid recovery.