European stocks rose on Friday, on the tail of a Wall Street rally around blowout chipmaker earnings, while investors expected further signs of progress in the US debt ceiling negotiations.
Europe’s region-wide Stoxx 600 rose 0.3 per cent, while France’s Cac 50 and London’s FTSE 100 both gained 0.2 per cent. Germany’s Dax was flat.
Contracts tracking Wall Street’s benchmark S&P 500 and those tracking the tech-heavy Nasdaq 100 rose 0.3 per cent ahead of the New York open.
Investors were watching developments in Washington, where policymakers signalled they were inching towards a deal on raising the US debt ceiling before a June deadline to avoid an unprecedented government default.
“In politics as well, if markets start to sell off because we get uncomfortably close to the deadline, clearly politicians will start to change behaviour,” said Emiel van den Heiligenberg, head of asset allocation at LGIM.
The pressure on government bonds eased slightly. The yield on the policy-sensitive two-year bills fell 0.03 percentage points to 4.49 per cent. The yield on the benchmark 10-year note slipped 0.03 percentage points to 3.78 per cent. Bond yields fall as prices rise.
The yield on Treasuries maturing in a month — close to the date when the US government could run out of money — was at 5.7 per cent on Friday, having slipped from a high of 6.01 per cent earlier in the week.
The dollar lost 0.3 per cent against a basket of six other currencies.
The moves come a day after Nvidia fuelled a market rally after it announced higher than expected quarterly earnings, bolstered by soaring demand for chips used in generative artificial intelligence systems.
Nvidia shares jumped 24 per cent on the day, putting the company on course to become the first chipmaker to be valued at more than $1tn. The rally spread to other AI-related stocks, helping the tech-heavy Nasdaq Composite finish 1.7 per cent higher. The benchmark S&P 500 rose 0.9 per cent.
“The equity market performance is very narrow. Only technology stocks are performing — ex those technology stocks, the S&P is flat,” said van den Heiligenberg.
“This is not that dissimilar to 1995, when people started talking about the potential of the internet . . . Slowly but gradually it becomes a career risk to ignore this. If you don’t have technology in your equity portfolio, you might actually miss a structural move in the markets,” he added.
Turkey’s lira fell to 20 against the US dollar for the first time, in the latest sign of the mounting pressure on the country’s economy ahead of Sunday’s runoff election. President Recep Tayyip Erdoğan, who has led Turkey for two decades, is expected to win this weekend’s second-round vote.
Oil prices rose following mixed messages from Opec+ member states about future production of the fuel. Brent crude, the international benchmark, rose 0.35 per cent to $76.53 per barrel, while West Texas Intermediate, the US equivalent, rose 0.6 per cent to $72.26.
Russian president Vladimir Putin and the country’s deputy prime minister had said that further production cuts were unlikely at the Opec+ meeting next month.
Asian stocks were subdued, with Hong Kong’s Hang Seng index falling 1.9 per cent while China’s CSI was flat.