European shares rise on optimism over US debt ceiling talks

European shares rose on Friday after an overnight rally on Wall Street, as chip makers boosted markets and signs from Washington that politicians were reaching an agreement on the US debt ceiling.

Europe’s area-wide Stoxx 600 was up 0.5 percent, France’s Cac 40 0.6 percent and London’s FTSE 100 0.7 percent higher at the open.

The move comes a day after Nvidia announced that its quarterly earnings fared above analyst expectations, boosted by rising demand for chips used in generative artificial intelligence systems.

Nvidia shares jumped 24 percent on the day, making the company the first chipmaker to be valued at more than $1 trillion. The rally spread to other AI-related stocks, sending the tech-heavy Nasdaq Composite higher by 1.7 percent. The benchmark S&P 500 rose 0.9 percent.

Meanwhile, US President Joe Biden indicated late Thursday that White House officials were “making progress” in talks on the US debt ceiling, as a looming deadline on an unprecedented government default pulled investors’ nerves.

Contracts tracking Wall Street’s benchmark S&P 500 and those tracking the tech-heavy Nasdaq 100 were both flat ahead of the New York open.

“While Nvidia is promoting throughout the market, I don’t know how much it will be, or should be, if we go into the three-day weekend without a debt ceiling agreement,” said Mike Zygmont, head of research and trading. Harvest instability.

Earlier in the week, credit rating agency Fitch warned it could downgrade the country’s triple A rating because of “hardening” on the US debt ceiling.

The yield on Treasuries maturing in one month – nearing the date when the US government could run out of money – was 5.8 per cent on Friday, having slipped from a high of 6.01 per cent earlier in the week.

The yield on policy-sensitive two-year bills rose 0.02 percentage points to 4.52 per cent. The yield on the benchmark 10-year note was flat at 3.81 per cent. Bond yields rise as prices fall.

The Turkish lira fell below 20 against the US dollar for the first time in the latest sign of mounting pressure on the country’s economy ahead of Sunday’s runoff election. President Recep Tayyip Erdogan, who has led Turkey for two decades, is expected to win a second round of voting later this week.

Oil prices rose following mixed messages from OPEC+ member countries on future fuel production. International benchmark Brent crude rose 0.24 per cent to $76.44 a barrel, while US counterpart West Texas Intermediate rose 0.4 per cent to $72.2.

The drop followed comments by Russian President Vladimir Putin and the country’s deputy prime minister that further production cuts were unlikely at next month’s OPEC+ meeting.

Asian shares were mixed, with Hong Kong’s Hang Seng index falling 1.9 percent while China’s CSI was flat.