Agreement in US debt dispute could calm stock markets | free press

2023-05-28 19:00:17

US President Joe Biden and Republican Kevin McCarthy have announced a preliminary agreement. This could provide some relief for investors.

The provisional agreement reached in the US debt dispute over the weekend could provide some relief for investors in the new trading week. The impending insolvency of the world’s largest economy had recently put pressure on stock markets worldwide and pushed the Dax below its recent record high of 16,331 points.

US President Joe Biden and Republican Kevin McCarthy announced a preliminary agreement in Washington on Saturday (local time). A default by the United States is thus likely to have been averted. The project still has to be approved by Congress.

Expert Thomas Altmann from QC Partners warned against too much euphoria: “It’s still too early for a final sigh of relief. But you can take a deep breath.” Despite the agreement, investors should not expect any major price jumps. “Because the emerging agreement has already been gradually priced in, especially on the stock and bond markets.”

Creditworthiness of the USA threatened in the meantime

The dispute had meanwhile threatened the creditworthiness of the USA. The rating agency Fitch retained the top rating “AAA” for the world’s largest economy on Wednesday evening (local time), but lowered the outlook for creditworthiness to “negative”, so that a downgrade could be threatened.

The months-long dispute had brought the United States to the brink of insolvency. If this had actually happened, a subsequent global financial crisis could have triggered a sharp economic downturn. Millions of people could have lost their jobs as a result.

Even if the final agreement is reached in time, investors will have little time to catch their breath. Because already on Friday, the monthly US labor market report is the second important weekly event on the agenda – it is an important factor for the interest rate policy of the American Federal Reserve. In view of the significant tightening of monetary policy since March 2022 in the fight against inflation, experts are now most likely expecting an interest rate pause.

New week starts leisurely

The new week begins – apart from possible headlines on the way to the final agreement in the US debt dispute – rather leisurely: There is trading on the German stock market on Whit Monday, but not on a number of other stock exchanges. New York and London, for example, have a long weekend, and important economic data and company dates are not on the agenda either.

On Tuesday, the news situation was also still comparatively calm. Among other things, the quarterly figures of the MDAX-listed commercial real estate specialist Aroundtown, as well as data on economic and industrial confidence in the euro zone and consumer confidence in the USA have been announced. The quarterly report of the financial service provider Wüstenrot & Württembergische, purchasing manager indices from the Chinese market, which is important for Germany, and consumer prices from Germany will follow in the middle of the week.

On Thursday, the publication of further purchasing managers’ indices is in the diary, on Friday the news agenda looks quite clear – apart from the US jobs report. At the electronics retailer Ceconomy, a capital market day could move the share price. (dpa)