BEIJING—Global stock markets and Wall Street futures rose Thursday on hopes U.S. political leaders can reach agreement to avoid a potentially disastrous default on government debt.
London and Paris opened higher. Shanghai, Tokyo, and Hong Kong advanced. Oil prices edged lower.
“Markets are now fully pricing an in-time resolution of the crisis,” said Clifford Bennett of ACY Securities in a report. “No one wants to sell ahead of an announcement of a deal being made.”
In early trading, the FTSE in London rose 0.7 percent to 7,776.24. The DAX in Frankfurt gained 1.5 percent to 16,187.47 and the CAC 40 in Paris advanced 0.9 percent to 7,468.73.
On Wall Street, futures for the benchmark S&P 500 index and the Dow Jones Industrial Average were up 0.1 percent.
On Wednesday, the S&P 500 and the Dow both rose 1.2 percent. The Nasdaq composite gained 1.3 percent.
Stocks of companies that get much of their revenue from the federal government rose. Military contractor Lockheed Martin climbed 2.1 percent. Northrop Grumman gained 2.7 percent.
Speaker Kevin McCarthy of the House of Representatives said Tuesday the two sides were far apart but could reach a deal by the end of the week. The U.S. government will run out of cash if they don’t agree by June 1 to increase its borrowing limit.
Any disruption in U.S. government borrowing and debt payments could send shockwaves through the global financial system. Treasury debt is regarded as the world’s safest asset and influences the price of private sector borrowing.
In Asia, the Shanghai Composite Index gained 0.4 percent to 3,297.31 and the Nikkei 225 in Tokyo advanced 1.6 percent to 30,573.93. The Hang Seng in Hong Kong rose 0.9 percent to 19,727.25.
The Kospi in Seoul was 0.8 percent higher at 2,515.40 and Sydney’s S&P-ASX 200 added 0.5 percent to 7,236.80.
India’s Sensex was up less than 0.1 percent at 61,57.39. New Zealand and Southeast Asian markets also rose.
Traders already expected at least a brief U.S. recession this year following interest rate hikes to rein in stubbornly high inflation by cooling business activity.
Investors also worry about the health of global banks following three high-profile failures in the United States and one in Switzerland. Banks have been squeezed by the unexpectedly fast run-up in interest rates, which caused the market prices of bonds on their books to fall.
On Wednesday, Western Alliance Bancorp recovered some of its losses after it gave an update on its deposit levels. It jumped 10.2 percent but still is down 41.6 percent for the year.
PacWest Bancorp, another bank under heavy scrutiny, rose 21.7 percent to trim its loss for the year to about 75.8 percent.
In energy markets, benchmark U.S. crude lost 33 cents to $72.50 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.97 on Wednesday to $72.83. Brent crude, the price basis for international oil trading, declined 38 cents to $76.58 per barrel in London. It gained $2.05 the previous session to $76.96.
The dollar advanced to 137.75 yen from Wednesday’s 137.61 yen. The euro declined to $1.0815 from $1.0838.
