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European shares rise on optimism over US debt ceiling talks

by SuperiorInvest

European shares rose on Friday, capping the end of an overnight rally on Wall Street, as chip makers boosted markets and there were signs from Washington that policymakers were closing in on a deal on the US debt ceiling.

Europe’s Stoxx 600 rose 0.5 percent, France’s Cac 40 added 0.6 percent and London’s FTSE 100 was 0.7 percent higher at the open.

The moves come a day after Nvidia reported its quarterly earnings far exceeded analysts’ expectationsfueled by soaring demand for chips used in generative artificial intelligence systems.

Nvidia shares jumped 24 percent on the day, setting the company on course to become the first chipmaker to be valued at more than $1 billion. The rally extended to other AI-related stocks, helping the tech-heavy Nasdaq Composite finish 1.7 percent higher. The benchmark S&P 500 rose 0.9 percent.

Meanwhile, U.S. President Joe Biden signaled late Thursday that White House officials did “make progress” in U.S. debt ceiling negotiations as the looming deadline for an unprecedented government default strained investors’ nerves.

Contracts tracking Wall Street’s benchmark S&P 500 and the tech-heavy Nasdaq 100 were both unchanged ahead of the New York open.

“While Nvidia is generating market-wide hype, I don’t know how much it will or should matter if we go into a three-day weekend without a deal on the debt ceiling,” said Mike Zigmont, head of research and trading at Harvest Volatility.

Earlier in the week, rating agency Fitch warned it could cut the country’s rating to triple A because of the “edge” above the US debt limit.

The yield on Treasuries due in a month — close to the date when the U.S. government could run out of money — was at 5.8 percent on Friday, down from a weekly high of 6.01 percent.

The yield on two-year notes sensitive to monetary policy rose 0.02 percentage point to 4.52 percent. The yield on the benchmark 10-year bond stagnated at 3.81 percent. Bond yields rise as prices fall.

Turkey’s 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 election. President Recep Tayyip Erdoğan, who has led Turkey for two decades, is expected to win the second round of voting at the weekend.

Oil prices rose after mixed reports from Opec+ member states on future fuel production. Brent crude, the international benchmark, rose 0.24 percent to $76.44 a barrel, while the U.S. equivalent West Texas Intermediate rose 0.4 percent to $72.2.

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

Asian stocks were mixed, with Hong Kong’s Hang Seng index down 1.9 percent while China’s CSI was flat.

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