Stocks called up as US debt bill passes vote

(Alliance News) - Stocks in London are set to open higher on Thursday, after the US debt ceiling bill was passed by the House of Representatives and now moves onto the Senate.

IG says futures indicate the FTSE 100 index of large-caps to open up 28.7 points, 0.4%, at 7,474.84 on Thursday. The index closed down 75.93 points, or 1.0% at 7,446.14 on Wednesday.

New York closed lower on Wednesday. The Dow Jones Industrial Average was down 0.4%, and both the S&P 500 and Nasdaq Composite were down 0.6%.

The US House approved a debt ceiling and budget cuts package as President Joe Biden and Speaker Kevin McCarthy assembled a bipartisan coalition of centrist Democrats and Republicans against fierce conservative blowback and progressive dissent.

The hard-fought deal pleased few, but politicians assessed it was better than the alternative — a devastating economic upheaval if Congress failed to act. Tensions ran high throughout the day as hard-right Republicans refused the deal, while Democrats said "extremist" Republican views were risking a debt default as soon as next week.

With the House vote of 314-117, the bill now heads to the Senate with passage expected by week's end.

Stocks were higher in Asia on Thursday. The Nikkei 225 index in Tokyo was up 0.7%. In China, the Shanghai Composite was up 0.3%, while the Hang Seng index in Hong Kong was up 0.8%. The S&P/ASX 200 in Sydney closed up 0.3%.

China's manufacturing sector returned to a marginal state of growth in May, according to the latest survey data on Thursday.

The Caixin manufacturing purchasing managers' index rose to 50.9 points in May from 49.5 in April. Crossing over the 50-point no-change mark, it shows the sector has returned to growth, albeit marginal.

In March, the PMI was 50.0, having fallen from 51.6 in February.

"Both manufacturing supply and demand improved. Manufacturing output grew significantly, with the related subindex logging its highest since June 2022. The subindex for total new orders recorded its second-highest reading since May 2021 as surveyed businesses reported more clients and demand, even though demand remained a bit weaker than supply," said Wang Zhe, Caixin senior economist.

Japan's manufacturing sector also returned to growth in May as domestic economic conditions recovered, survey data showed.

The au Jibun Bank PMI rose to 50.6 points in May from 49.5 the month before, meaning the sector saw marginal growth during May.

"The latest au Jibun Bank PMI survey highlights a decisive turnaround in manufacturing sector performance during May and brings to an end a six-month period of weakening business conditions. A recovery in economic conditions at home helped to lift client spending, which offset another month of subdued demand in key export markets," said Tim Moore, economics director at S&P Global Market Intelligence.

The dollar was lower following the debt ceiling vote, having benefited from risk aversion prior.

Sterling was quoted at USD1.2426 early Thursday, higher than USD1.2381 at the London equities close on Wednesday.

The euro traded at USD1.0678 early Thursday, higher than USD1.0657 late Wednesday. Against the yen, the dollar was quoted at JPY139.65, down versus JPY139.83.

Gold was quoted at USD1,963.11 an ounce early Thursday, lower than USD1,971.75 on Wednesday. Brent oil was trading at USD72.95 a barrel early Thursday, lower than USD73.07 late Wednesday.

In Thursday's UK corporate calendar, there are full-year results from Dr Martens, Pennon and Auto Trader.

The economic calendar has EU unemployment and inflation figures at 1000 BST, before the European Central Bank releases its latest meeting minutes at midday. There is also manufacturing PMI prints from the UK and the US.

By Sophie Rose, Alliance News reporter

Comments and questions to [e-mail]

Copyright 2023 Alliance News Ltd. All Rights Reserved.