Tuesday, May 24, 2022

European stocks rise after US budget deal


London: Europe’s main stock markets climbed on Wednesday as investors cheered a long-awaited deal on the US budget.

London’s benchmark FTSE 100 index rose 0.26 per cent to stand at 6,540.03 points in afternoon deals.

“European indices are trading higher on Wednesday, buoyed by a deal on the US budget that should avert another government shutdown in January.”

Congressional negotiators on Tuesday reached a two-year deal on spending which President Barack Obama hailed as a sign of rare bipartisan cooperation in the strife-filled legislature.

Under an agreement in October that ended a crippling 16-day shutdown, US federal spending authority expires on January 15, when a new agreement would need to be in force.

Traders were meanwhile keeping a close eye on next week’s US Federal Reserve policy meeting to see if it announces a cut in its stimulus programme.

Expectations that the US central bank will start to whittle down, or “taper” the $85 billion-a-month bond-buying scheme were fuelled on Monday.

“The (US economic) data has improved significantly, there’s no evidence of any negative impact from the shutdown and future obstacles to a sustainable recovery are now being removed.”

In foreign exchange on Wednesday, the euro climbed to $1.3767 from $1.3760 late in New York on Tuesday.

The European single currency gained to 84.07 pence from 83.68 pence, while sterling was lower against the dollar, at $1.6374 from $1.6442.

The euro continued to receive support from the European Central Bank’s decision last week to delay cutting interest rates further, traders said.

Gold prices dropped to $1,255.70 an ounce on the London Bullion Market from $1,266.25 on Tuesday.

The bank said its target price for the share is now 5.00 euros, up from 1.90 euros.

Asian markets closed lower on Wednesday as fears that the Federal Reserve would soon wind down its stimulus programme overshadowed the US budget deal, traders said.

The dollar retreated against the yen after approaching highs not seen for five years.


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