European shares tentative as nerves over US debt talks linger
European shares were off to a cautious start on Monday while Wall Street futures struggled, with traders left on edge as U.S. debt ceiling negotiations approached crunch time after stalling last week.
U.S. President Joe Biden and House Republican Speaker Kevin McCarthy will meet to discuss the debt ceiling on Monday, less than two weeks before a June 1 deadline after which Treasury expects the federal government will struggle to pay its debts.
A failure to lift the debt ceiling would trigger a default, likely sparking chaos in financial markets and a spike in interest rates.
The MSCI All-World index (.MIWD00000PUS) was up 0.12% on the day, while Europe’s STOXX 600 <.STOXX > fell 0.03%. London’s FTSE 100 (.FTSE) gained 0.19%.
U.S. stock index futures similarly painted a mixed picture, with S&P 500 futures falling 0.15% while Nasdaq futures rose 0.03%.
“We believe that the debt ceiling issues in the U.S. will remain quite short-lived. Certainly there (are) risks there of greater financial volatility,” said HSBC chief Asia economist Frederic Neumann at a webinar on Monday.
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