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Failed US debt ceiling talks unnerve markets

Equity markets slid on Tuesday with concerns surrounding the US debt ceiling weighing on sentiment. A meeting between US President Joe Biden and House Speaker Kevin McCarthy failed to produce any results, meaning the world’s largest economy is still moving closer towards a potential default, which could happen in less than a month. Markets are likely to see more swings this week as representatives from Congress will meet with the president each day until Friday in hopes of coming to an agreement on increasing the national debt.

Shane Strowmatt, LGT
Temps de lecture
5 minutes
US Capitol Building
© Shutterstock

In New York, stock markets fell on Tuesday after remaining roughly stable to start the week. Market participants took positions ahead of the US Consumer Price Index, which is closely watched by the Fed and due later Wednesday. Dow Jones Industrial lost 0.17% to finish the day at 33,561.81 points and the S&P 500 dropped 0.46% to close at 4,119.17 points. The tech-heavy Nasdaq-100 sank 0.68%.

US regional banks sold off heavily to start the day on Tuesday, albeit not as bad as some previous tumbles during the past weeks. Later in the day, however, some stocks managed to return to positive territory with PacWest ending the day up 2.35%. The other regional bank to make the headlines regularly recently, Western Alliance, saw its shares traded fall 1.35% by the end of the day. Regional lenders have been under pressure since Silicon Valley Bank and Signature Bank both collapsed earlier this year.

In the banking sector on the other side of the Atlantic, UBS, which is in the process of acquiring peer Credit Suisse, appointed Credit Suisse Chief Executive Officer Ulrich Koerner to a position on its management board. Koerner will be responsible for Credit Suisse’s operations during their integration into UBS.

In Asia, markets were also anxiously awaiting US inflation figures for a hint as to how the rest of the US Federal Reserve’s hiking cycle could look. In mainland China, the Shanghai Composite dropped about 1% and the Shenzhen Component lost 0.53%. Hong Kong’s Hang Seng Index slipped 0.3%. Japan’s Nikkei and South Korea’s Kospi were both down around 0.4%.

Corporate news in focus: Q1 figures from Lonza, Alstom, Dufry, Ahold Delhaize, Salzgitter. Annual general meetings at Volkswagen, Swatch.

Economic data in focus: German Consumer Price Index (08:00 CET), US Consumer Price Index (14:30), SNB Chairman Thomas Jordan speaks (18:00).

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.

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