US equities advanced on Tuesday, helped by rallying AI-related stocks and hopes that lawmakers were on course to pass the debt ceiling bill ahead of the June deadline.
Wall Street’s benchmark S&P 500 rose 0.3 per cent, having closed at a nine-month high on Friday, while the tech-heavy Nasdaq Composite traded 0.6 per cent higher.
Both were bolstered as Nvidia breached $1tn in market capitalisation after its shares rose 4.8 per cent at the market open, becoming the first chipmaker to join the trillion-dollar club, alongside companies such as Amazon, Apple and Alphabet.
Nvidia has been riding on a surge of enthusiasm across Wall Street for companies expected to benefit from developments in artificial intelligence.
Meanwhile, the pressure on US Treasuries eased as traders predicted the US debt ceiling bill, agreed on Saturday, would pass through Congress in the course of this week, ahead of the looming default deadline.
The yield on policy-sensitive two-year bills fell 0.07 percentage points to 4.52 per cent. The yield on the benchmark 10-year note was down 0.1 percentage points to 3.72 per cent. Bond yields fall as prices rise.
The deal between US lawmakers and the White House would raise the country’s $31.4tn debt ceiling for two years until after the next presidential election in late 2024.
To come into force, the bipartisan bill needs to pass both chambers of Congress, with traders poised for the first vote in the House on Wednesday.
In Europe, the region-wide Stoxx 600 was down 0.7 per cent, the Cac 40 lost 1.1 per cent and the FTSE 100 dropped 1 per cent.
In foreign exchange markets, the Turkish lira weakened to TL20.43 against the US dollar, hitting a record low after President Recep Tayyip Erdoğan secured victory in the country’s election over the weekend.
Meanwhile, the Hang Seng China Enterprises index was down during Asian trading on Tuesday, pushing it 20 per cent lower from its peak in January. That temporarily placed it in bear market territory, although it later rallied to close up 0.5 per cent.
China’s benchmark CSI 300 index of Shanghai- and Shenzhen-listed stocks was also down more than 10 per cent from its peak this year, matching the technical definition of a market correction, although it also later rallied to close marginally up.
Pressure on Chinese stocks follows mounting worries over the outlook for the world’s second-largest economy as tensions rise between Washington and Beijing.
The relentless sell-off reflects a growing consensus among investors that the country’s economic recovery is losing steam, about half a year after Beijing abandoned President Xi Jinping’s disruptive zero-Covid 19 policy.
Winnie Wu, China equity strategist at Bank of America, said clients had described many Chinese stocks as “too cheap to short but not good enough to go long”.
Wu said that while valuations for China shares had become attractive, the recovery remained weaker than anticipated and the economy was likely to continue underperforming without more substantial state support.
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