- US stocks rebound over hopes of a short-term solution to the key problem at hand.
- Improving Sino-US relations, upbeat US ADP data add to the risk-on mood.
- Acuity Brands jump 11%, gas prices in Europe propel market volatility.
- US Jobless Claims, risk catalysts in focus ahead of Friday’s NFP.
Wall Street managed to post minor gains by the end of Wednesday’s North American session amid hopes of an extension to the US debt ceiling. Also favoring the sentiment could be the early signals for Friday’s US Nonfarm Payrolls (NFP), namely the ADP Employment Change for September, as well as headlines suggesting improving communications between the US and China.
Against this backdrop, Dow Jones Industrial Average (DJI) closed 102 points up, or 0.30%, while S&P 500 gained 0.40% or 17 points to end the trading day. Further, the tech-heavy Nasdaq rose 68 points to 14,501 on Wednesday.
Risk appetite improved following the Senate Republican Leader Mitch McConnell’s favor to a short-term stretch, till December, to the US debt limit. The Republicans earlier rejected the much-needed action even as US Treasury Secretary Janet Yellen warned of empty pockets by October 18 if the debt filibuster couldn’t be agreed by then. It should be noted, however, that the White House awaits a formal offer by Republicans to assent move, which in turn can offer another push to the market optimism.
On a different page, Chinese media portrays recently positive relations between the US and China, per the latest communications between US President Joe Biden and his Chinese counterpart Xi Jinping. Biden and Xi Jinping previously respected the Taiwan agreement and chatters are also loud that they meet, virtually, by the year-end. This in turn adds to the risk-on mood.
However, US Secretary of State Antony Blinken criticized China’s approach for Taiwan while also urging the dragon nation for acting responsibly over Evergrande’s financial crisis, signaled Bloomberg. On the same line was the volatility in gas prices in Europe.
Talking about data, a three-month high US ADP Employment Change, 568K versus 340K prior, underpins hopes for a strong US NFP print, up for publishing on Friday.
The market optimism could be observed in the US 10-year Treasury yields that eased after refreshing the highest levels since June 17 whereas the US Dollar Index (DXY) and the Antipodeans recently recovered.
Stock-specific news highlights an 11% jump by Acuity Brands on a rosy economic forecast.
Moving on, the weekly US Jobless Claims and Fedspeak may entertain traders but headlines concerning debt ceiling and China will be more important for clear direction.
Read: Forex Today: Sentiment improves modestly on US debt news