(Bloomberg) — U.S. stock futures rose, Treasury yields held steady and an indicator of dollar strength slipped slightly after President Joe Biden and House Speaker Kevin McCarthy said they had had a productive discussion on the debt ceiling .
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The slightly positive but cautious tone was also reflected in Asian equities, with benchmarks in Japan, South Korea and Australia opening higher on Tuesday. While Biden said he and McCarthy had agreed in ongoing talks that a default was off the table, investors remain on their toes.
Contracts for the S&P 500 and Nasdaq 100 rose about 0.3%, while an index of Asian stocks also rose 0.3%.
Yields on policy-sensitive two-year government bonds were little changed at 4.31% after short-term interest rates rose on Monday. Australian and New Zealand government bond yields rose slightly.
This followed choppy developments in US markets on Monday, with the S&P 500 oscillating between gains and losses before closing flat. The tech-heavy Nasdaq 100 rose 0.3% even as chipmakers came under pressure after China said Micron Technology Inc. products failed a cybersecurity audit.
Investors will remain cautious until there are clearer signs that the standoff between Democrats and Republicans could be broken before the government runs out of money. Treasury Secretary Janet Yellen said the chances are “pretty slim” that the US can pay all of its bills by mid-June.
“Right now, both sides will likely continue to stir things up, but at the end of the day, the issue will likely be resolved at the last minute,” Burns McKinney, senior portfolio manager at NFJ Investment Group, said on Bloomberg Television. “What we expect in the near term is increased volatility.”
In Asia, concerns are growing over China’s tepid post-pandemic recovery, which is hurting the prices of key commodities like iron ore and copper. Both have collapsed in recent trading days.
Signs of a geopolitical shift between the regional powerhouse and the US helped Hong Kong shares soar more than 1% on Monday, with Biden hinting at improving ties with Beijing. Hong Kong futures showed an increase on Tuesday.
Still, Micron Technology Inc.’s stock fell after China’s cyberspace regulator said its products had failed cybersecurity testing, threatening the company’s sales in a key market.
St. Louis Federal Reserve President James Bullard said he was considering two more rate hikes this year, while Minneapolis Fed President Neel Kashkari said a pause next month by the Federal Reserve should signal that that the tightening is not over yet.
Elsewhere, oil markets edged higher as traders waited for more crucial news on US debt talks, while gold prices held steady after falling 0.3% on Monday.
Important events this week:
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Eurozone S&P Global Eurozone Manufacturing & Services PMI, Tuesday
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US new home sales, Tuesday
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Dallas Fed President Lorie Logan speaks Tuesday
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The Fed will release minutes of its March 2-3 monetary policy meeting on Wednesday. May
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Bank of England Governor Andrew Bailey speaks on Wednesday
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US Initial Jobless Claims, GDP, Thursday
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Rate decisions in Turkey, South Africa, Indonesia, South Korea Thursday
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Tokyo CPI, Friday
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US Consumer Income, Wholesale Inventories, Durable Staples, University of Michigan Consumer Sentiment, Friday
Some of the key movements in the markets:
Shares
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S&P 500 futures were up 0.3% as of 9:25 a.m. Tokyo time. The S&P 500 remained stable
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Nasdaq 100 futures were up 0.3%. The Nasdaq 100 rose 0.3%
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Japan’s Topix index rose 0.4%
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Australia’s S&P/ASX 200 index rose 0.3%
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Hong Kong’s Hang Seng futures rose 0.3%
currencies
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The Bloomberg Dollar Spot Index fell 0.1%
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The euro was little changed at $1.0819
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The Japanese yen was little changed at 138.49 per dollar
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The offshore yuan was little changed at 7.0445 per dollar
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The Australian dollar rose 0.1% to $0.6660
cryptocurrencies
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Bitcoin fell 0.1% to $26,865.16
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Ether is little changed at $1,819.32
Bind
raw materials
This story was created with the support of Bloomberg Automation.
– Featuring Emily Graffeo, Vildana Hajric and Jason Scott.
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