A Resoundingly Positive Week on the Markets Driven by the Potential of a US Debt Ceiling Deal
With the UK, European and Asian markets all up for the week, there’s hope on the horizon
UK and Europe: A Strong Week
European profits and economic results coming from the first quarter of the year are surprisingly strong.
Rounding up a positive week, the German DAX index hit record highs on Friday, with the broader Euro STOXX 600 index rising to a one year high.
These highs are owing both to the positive profits as well as the potential of a US debt ceiling agreement.
The FTSE 100 index also hit highs for the week, with the financial services and mining sectors driving the gains.
Some domestic turmoil on the markets occurred, with the announcement of both the Tesco Chairman stepping down, as well as the British American Tobacco CEO.
Americas: Soft Launch
US President, Joe Biden, shared optimism about his confidence in the US’ ability to strike a debt ceiling deal, sending US markets to 9-month highs.
Yet the US would need to strike a deal in a mere 15 days and there was some further doubt cast on their ability to reach a political agreement on Friday.
Whatever is agreed, however, spending cuts are likely to be needed to ensure that the debt ceiling isn’t hit once again within weeks.
The financial sector is looking particularly rosy, with lender Western Alliance announcing a growth of $2billion in customer deposits and even the recently beleaguered Pacific West seeing their stocks rise.
The US dollar rose in strength for the week, with most other major Latin American currencies weakening in comparison.
The cautious move towards optimism has caused many analysts to quote the soft launch, which is when an economy starts to pick up after narrowly dodging a recession.
Asia and Australasia: Japan is Soaring
The Japanese TOPIX index hit highs that haven’t been seen since the late 1990s, as Japanese stocks outperform other global stocks for the year so far.
Japan has taken what is known as an ultra-loose monetary policy approach to their inflation, which might have added to the circumstances to a market peak.
Unlike other countries, they’ve not used interest rates to try and control inflation, instead opting to use currency controls and other methods.
This has left the Japanese Yen relatively weak, but is encouraging impressive growth on the market front.
News of the US debt ceiling sent other regional markets soaring, with Australia becoming one of the only countries to see a wobble following the announcement that they planned to abandon blockchain in their stock exchange.
Stock World: Driving Forces
High end car maker, Aston Martin, are experiencing a positive rally this year as their stocks are up nearly 75%.
This rose a further 22% just last week after Chinese company Geely announced that they had agreed to buy a large chunk of the shares available on the market.
The automobile company was first listed on the London Stock Exchange in 2018. Following their IPO, stocks initially plummeted, owing to a whole host of internal and external reasons.
As a luxury automobile company, they are firmly focused on the growing luxury Asian market, which has only been further boosted this year as China ended their Covid-19 restrictions.
In other news, AI made the headlines once again as both Vodafone and BT announced job cuts, hoping to integrate the cheaper, robot based models to plug the gaps.