May 29, 2023
United States:
Debt Deal Adds Brake on US Economy Already at Risk of Recession
The cap on government spending in Washington’s deal to raise the federal debt limit adds a fresh headwind to a US economy already burdened by the highest interest rates in decades and reduced access to credit.
The tentative deal crafted by President Joe Biden and House Speaker Kevin McCarthy over the weekend — assuming it’s passed by Congress in coming days — avoids the worst-case scenario of a payments default triggering financial collapse. But it also could, even if at the margin, add to risks of a downturn in the world’s largest economy.
Europe:
European Stocks Muted After US Debt Deal, with UK Market Closed
European shares were little changed as investors assessed a tentative agreement in the US to raise the debt ceiling, while trading volume was depressed as markets were closed for holidays in many countries.
The Stoxx Europe 600 Index was little changed at 12:12 p.m. in Paris, after it had rallied on Friday on growing optimism the agreement was near. Real estate and energy shares outperformed, while banks declined. Spanish equities erased earlier gains to trade flat after Prime Minister Pedro Sanchez called a snap election in the wake of losses for his Socialist party in regional and local voting on Sunday. Turkish stocks jumped a day after President Recep Tayyip Erdogan sealed an election victory.
Asia:
India Reclaims Spot as World’s Fifth-Largest Stock Market
India has reclaimed its spot as the world’s fifth largest stock market after losing that status to France in January, as foreign investors snap up the Asian nation’s shares.
India’s market capitalization stood at $3.3 trillion as of Friday, helped also by a rebound in Adani Group’s stocks after a short seller report earlier in the year sparked a heavy selloff. Meanwhile, France lost more than $100 billion in market value last week as luxury goods makers such as LVMH Moet Hennessy Louis Vuitton SE and Vivendi SE saw a rout amid fears of a slowdown in China and the US.
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