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Italy foreign trade non-EU; no major corporate updates expected

Opening Call:

Stock futures rose after the U.S. debt-ceiling deal, though trading may be thin due to holidays in the U.S. and parts of Europe. In Asia, most stock benchmarks advanced; the dollar steadied; while oil futures rose and gold fell slightly.

Equities:

Stock futures rose after U.S. President Biden and House Speaker Kevin McCarthy said Sunday evening that they have ironed out the final elements of their agreement to raise the nation's borrowing limit. Congressional votes on the deal could come as early as Wednesday in the House.

"The agreement prevents the worst possible crisis-a default for the first time in our nation's history, an economic recession, retirement accounts devastated, millions of jobs lost," Biden said in remarks from the White House on Sunday evening.

Markets in the U.S., the U.K. and parts of Europe are closed Monday for a holiday.

Stocks had climbed Friday as a debt-ceiling deal began to take shape, while a rally in technology shares also gained steam.

Investors continued to clamor for chip stocks as a way to bet on a spending boom on artificial-intelligence technology.

"We believe the AI hype is far more justified than some of the other tech-hype cycles," such as cryptocurrencies and nonfungible tokens, said Ross Mayfield, investment strategy analyst at Baird. The Nvidia forecast "was almost unprecedented in the magnitude to which it beat expectations. It really shows how immediately monetizable the demand is, " he added.

Tech companies have issued strong capital spending forecasts to build out their own artificial intelligence programs.

That demand surge should support chip stocks in the months ahead, according to Eric Freedman, chief investment officer at U.S. Bank Asset Management Group. "It's a very brave soul that's willing to take the other side of this trade, given current momentum," he said.

Read: Tech Stock Rally Leaves Small-Caps in the Dust

Forex:

The dollar steadied as traders assessed the U.S. debt-ceiling deal.

There's still meaningful room for market volatility in the days and weeks ahead, given that the deal could be put to a vote as soon as Wednesday, and will face opposition in Congress, MUFG Bank said, noting USD has traded with a mixed tone.

Bonds:

Treasurys aren't trading due to the Memorial Day weekend holiday in the U.S.

"Coming back from Memorial Day weekend, the tone of the market is likely going to be dictated by the state of the debt-ceiling negotiations," said Thomas Simons, U.S. economist at Jefferies.

On Friday, the 2-year Treasury yield jumped for a 12th straight session, extending its longest streak of advances in more than five years, after an uptick in the Federal Reserve's favorite inflation gauge boosted the likelihood of a June rate hike.

Energy:

Oil futures rose early Monday. Fears over U.S. debt default risks and concerns over its economy have eased on progress in the debt ceiling negotiations, said ANZ.

Russian comments on potential cooperation with other major oil producers in a meeting later this week should also support supply-side issues, ANZ said.

Metals:

Gold futures declined in Asia, extending last week's drop, as optimism around the U.S. debt ceiling reduces demand for the safe-haven asset.

For this week, the "recent debt ceiling issue remains a focus in the bond and gold market," Guotai Junan Securities said. Gold will likely continue to fall if the Biden-McCarthy debt-ceiling deal is approved by both houses of Congress before the so-called X-date, the brokerage said.

Read: Why gold still has a shot to reach a record high this year

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Copper rose, tracking broad gains in regional markets. Galaxy Futures said the U.S. debt-ceiling deal will likely improve risk appetite and trading sentiment in the near term.

However, Galaxy cautioned that buying demand for copper is broadly muted globally, as macroeconomic weakness drags on. It expects range-bound trading for the metal this week.

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Iron ore futures rose in China amid broad risk-on sentiment in Asian markets following the U.S. debt-ceiling deal. But analysts continue to warn of limited upside for the steelmaking ingredient.

SDIC Essence Futures said production activity at many steel producers remains low, weighing on iron ore buying demand. Industry expectations of potential steel output curbs are further damping the iron ore demand outlook, it added.

TODAY'S TOP HEADLINES

Biden, McCarthy Agree to Final Details of Debt-Ceiling Deal

President Biden and House Speaker Kevin McCarthy (R., Calif.) have ironed out the final elements of their agreement to raise the nation's borrowing limit, the two leaders said Sunday evening, ahead of congressional votes on the deal that could come as early as Wednesday in the House.

Their announcements came a day after White House and House Republican negotiators reached a tentative deal to raise the debt ceiling for two years and curb two years of government spending. They have been racing to beat a deadline of June 5, when the Treasury Department says the government could run out of money to pay its bills, which could trigger an unprecedented default on U.S. government debt and cascading problems through the global economy.

Tech Stock Rally Leaves Small-Caps in the Dust

Shares of large companies are racing past their smaller counterparts again.

The Russell 1000 index of large companies has gained 9.2% this year, beating the 0.7% advance of the small cap concentrated Russell 2000. That is the widest outperformance since 1997, when looking at years in which the Russell 1000 has been in positive territory through May 26, Dow Jones Market Data show.

The Dollar Is Still King in Europe, and It's Swaying Interest Rates

FRANKFURT-It's not just Americans watching anxiously to see if the Federal Reserve raises rates or the U.S. slides into recession; so are Europeans, and indeed many other countries. That's because for all the talk of deglobalization and de-dollarization, the dollar still reigns supreme, and financial and trade ties between the U.S. and key partners are as strong as ever. In Europe's case, they're even stronger.

The European Central Bank tried to chart a different path from the Fed early last year, signaling it would hold rates low as the Fed raised them aggressively. But after the euro slid against the dollar, ECB officials quickly reversed course over fears of imported inflation from goods like energy that are invoiced in dollars.

Turkey's Erdogan Defies Odds to Win Presidential Election

ISTANBUL-Turkish President Recep Tayyip Erdogan won Sunday's runoff presidential election, establishing him as one of the great survivors in recent political history and securing his outsize role in global affairs for what could be years to come.

The head of Turkey's election board declared Erdogan the victor. Erdogan won 52.13% of the votes, with his challenger, opposition leader Kemal Kilicdaroglu, claiming 47.87% with more than 99% of ballot boxes opened.

Saudi Arabia, Russia Ties Under Strain Over Oil-Production Cuts

Tensions are rising between Saudi Arabia and Russia as Moscow keeps pumping huge volumes of cheaper crude into the market that is undermining Riyadh's efforts to bolster energy prices, people familiar with the matter say.

Saudi Arabia, the de facto leader of the Organization of the Petroleum Exporting Countries, has expressed its anger to Russia for not following through fully on its pledge to throttle production in response to Western sanctions, the people said.

Europe Rebuffs China's Efforts to Split the West in Pushing Ukraine Cease-Fire

The Chinese envoy dispatched to push Beijing's peace plan for Ukraine carried a clear message: U.S. allies in Europe should assert their autonomy and urge an immediate cease-fire, leaving Russia in possession of the parts of its smaller neighbor that it now occupies, according to Western officials familiar with talks in capitals across the continent.

Diplomat Li Hui, who has visited Kyiv, Warsaw, Berlin, Paris and Brussels this month, urged European governments to view China as an economic alternative to Washington and said they should move quickly to end the conflict between Russia and Ukraine before it spreads, those officials said. Li was due to travel to Moscow on Friday.

Volkswagen Bets an Old SUV Can Help It Win Over Americans

BERLIN-After decades of trying to sell German engineering to Americans only to end up with a tiny slice of the world's most profitable car market, Volkswagen has a new strategy: Pretend it is American.

Inspired by electric-truck startups like Rivian and the buzz around Tesla's planned pickup, the European car giant is about to relaunch the defunct Scout brand as an off-road electric vehicle made to Americans' tastes.

Beverly Hills Voters Stymie LVMH Plans to Expand U.S. Hotel Business

Beverly Hills voters looked set to reject a proposal from LVMH Moët Hennessy Louis Vuitton to build a hotel in the wealthy Los Angeles-area enclave, setting back the luxury conglomerate's plans to expand its hotel business in the U.S.

Slightly more than half of votes counted in Tuesday's referendum were against plans by LVMH's Cheval Blanc brand to build its first hotel in the U.S., a planned 109-room location on Rodeo Drive with a private club, restaurants and commercial space for luxury boutiques. County election authorities say they have around 2% of ballots left to count, plus mail-in ballots that arrive by Tuesday. The results are scheduled to be certified June 2.

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Expected Major Events for Monday

05:30/IRL: Apr Retail Sales Index

08:00/ITA: Apr Foreign Trade non-EU

09:00/CRO: 1Q Flash Estimate GDP

09:00/CRO: Apr Retail trade

09:00/CRO: 1Q GDP

09:00/CRO: Apr Industrial Production Volume Index

23:01/UK: CBI Service Sector Survey

23:01/UK: Apr Zoopla House Price Index

23:01/UK: May Shop Price Index

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This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

May 29, 2023 00:18 ET (04:18 GMT)

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