The Indian , U.S. and EU markets rally as the United States gets closer to a debt ceiling deal and debt limit deadline extended to June 5.
Markets around the world rallied on Friday except some Asian markets based on the optimism in investors about the U.S. debt ceiling. The issue of U.S. debt ceiling was closely monitored by investors as fears of a default were driving investor sentiments low.
It has been reported earlier on Thursday that the democrats and republicans are just $ 70 billion apart. On Friday, U.S. treasury secretary Janet Yellen extended the deadline of the debt ceiling from 1st June to 5th June.
Indian Stock Market extended gains on Friday
The Indian stock markets on Friday extended gains as the Nifty and Sensex indices gained 1% , ending higher for the 2nd day in a row. On friday, indices closed green as Sensex surpassed the 62,000 mark up by 1.02% from previous close and the Nifty index gained 0.97% closing at 8,499.65.
As of closing bell of Friday, benchmark indices in India have gained around 1.5% which is in contrast to the MSCI index which is on a weekly loss.
Global markets rally amid debt ceiling optimism
Main indexes of Wall Street rose on Thursday and European shares recorded the highest one day gain in two months as the debt ceiling deal sent optimistic sentiments around the market. The Nasdaq closed 1.7% higher as the Nvidia hype sent tech stocks surged.
The MSCI world equity index which tracks shares in 49 countries was up by 1.09% as of Friday evening, but was still on a weekly loss of 0.51%.
On the other hand, U.S. data showed increased consumer spending which has made investors worry that the Federal Reserve might increase the federal funds rate in the June meet.
Janet Yellen extends the debt ceiling deadline to June 5
The U.S. treasury secretary Janet Yellen extended the deadline of the debt ceiling till June 5. She wrote in a letter to speaker Kevin McCarthy that the estimated date when the treasury will run out of resources to meet the government’s obligations is by June 5. This gave more time to the White House as earlier she had said that the last date they would run out of resources was June 1. The extended date gives the democrats and republicans an extra time of 4 days when they can agree on a bipartisan bill which would increase the debt limit of the U.S. by two years.
Both the republicans and the democrats agree that a bipartisan bill is the only way to avoid a debt default but they are reluctant to accept each other’s demands. U.S. president Joe Biden wants to increase the military expenditure while the republican house speaker Kevin McCarthy wants more spending cuts. The bipartisan bill has to be passed in the republican-controlled house of representatives and the democrats controlled-senate.
