European stocks rise on optimism over US debt ceiling talks

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European stocks rose on Friday on the back of a Wall Street rally around chipmaker earnings as investors expected further signs of progress in US debt ceiling negotiations.

Europe’s Stoxx 600 rose 0.3%, while France’s Cac 50 and London’s FTSE 100 both gained 0.2%. The German Dax remained flat.

Contracts tracking Wall Street’s benchmark S&P 500 and those tracking the heavyweight Nasdaq 100 were up 0.3% before the New York open.

Investors were watching developments in Washington, where politicians signaled they were moving closer to an agreement on raising the US debt ceiling before the June deadline to avoid an unprecedented government default.

“Even in politics, if markets start selling off because we get uncomfortably close to expiration, clearly politicians will start to change their behaviour,” said Emiel van den Heiligenberg, head of asset allocation at LGIM.

Pressures on government bonds eased slightly. The yield on policy-sensitive two-year bonds fell 0.03 percentage points to 4.49%. The yield on the 10-year benchmark bond fell 0.03 percentage points to 3.78%. Bond yields decrease as prices rise.

The yield on Treasuries due in one month – close to the date the US government could run out of money – was 5.7% on Friday, after slipping from its high of 6.01% earlier in the month. week.

The dollar lost 0.3% against a basket of six other currencies.

The moves come a day after Nvidia fueled a market rally following the announcement quarterly earnings higher than expecteddriven by the growing demand for chips used in generative artificial intelligence systems.

Nvidia shares soared 24% on the day, putting the company on track to become the first chipmaker to be valued at over $1 trillion. The rally spread to other AI-related stocks, helping the tech-heavy Nasdaq Composite close up 1.7%. The S&P 500 benchmark was up 0.9%.

“Stock market performance is very limited. Only tech stocks are performing: With the exception of those tech stocks, the S&P is flat,” van den Heiligenberg said.

“This is not much different from 1995, when people started talking about the potential of the Internet. . . Slowly but gradually it becomes a career risk to ignore him. If you don’t have the technology in your stock portfolio, you could actually miss out on a structural move in the markets,” she added.

The Turkish lira fell to 20 against the US dollar for the first time, the latest sign of mounting pressure on the country’s economy ahead of Sunday’s runoff. President Recep Tayyip Erdoğan, who has led Turkey for two decades, is expected to win this weekend’s second-round vote.

Oil prices rose following mixed messages from OPEC+ member states about future production of the fuel. Brent crude, the international benchmark, rose 0.35% to $76.53 a barrel, while West Texas Intermediate, the US equivalent, rose 0.6% to $72.26.

Russian President Vladimir Putin and the country’s deputy prime minister said further production cuts were unlikely at next month’s OPEC+ meeting.

Asian equities were subdued, with Hong Kong’s Hang Seng index down 1.9% while China’s CIS remained flat.