European stocks rose on Friday, following a Wall Street rally around explosive profits from chipmakers, as investors expected further signs of progress in U.S. debt ceiling talks.
The regional Stoxx 600 in Europe rose 0.3%, while the Cac 50 in France and the FTSE 100 in London both gained 0.2%. The German Dax was flat.
Contracts that track Wall Street’s benchmark S&P 500 and those that track the tech-heavy Nasdaq 100 rose 0.3% ahead of the New York open.
Investors were watching developments in Washington, where policymakers signaled they were heading for a deal on raising the U.S. debt ceiling before the June deadline to avoid an unprecedented government default.
“In politics too, if the markets start to sell because we are getting uncomfortably close to the deadline, it is clear that politicians will start to change their behavior,” said Emiel van den Heiligenberg, head of asset allocation. at LGIM.
Pressure on government bonds eased slightly. The yield on two-year policy-sensitive notes fell 0.03 percentage point to 4.49%. The yield on the benchmark 10-year note slipped 0.03 percentage points to 3.78%. Bond yields fall as prices rise.
The yield on Treasuries maturing in a month – close to when the US government could run out of money – was 5.7% on Friday, after slipping from a high of 6.01% earlier in the week.
The dollar lost 0.3% against a basket of six other currencies.
The moves come a day after Nvidia fueled a market rally after announcing quarterly results above expectationssupported by the growing demand for chips used in generative artificial intelligence systems.
Nvidia shares jumped 24% that day, putting the company on track to become the first chipmaker to be valued at more than $1 billion. The rally spread to other AI-related stocks, helping the tech-heavy Nasdaq Composite finish 1.7% higher. The benchmark S&P 500 index rose 0.9%.
“The performance of the stock market is very narrow. Only tech stocks are performing — outside of those tech stocks, the S&P is flat,” van den Heiligenberg said.
“It’s not that different from 1995 when people started talking about the potential of the internet… Slowly but gradually it’s becoming a business hazard to ignore it. If you don’t have technology in your equity portfolio, you could actually miss a structural move in the markets,” he added.
The Turkish lira fell to 20 against the US dollar for the first time, the latest sign of mounting pressure on the country’s economy ahead of Sunday’s run-off election. President Recep Tayyip Erdoğan, who has ruled Turkey for two decades, is expected to win the second-round vote this weekend.
Oil prices rose following mixed messages from OPEC+ member states on future production of the fuel. Brent crude, the international benchmark, rose 0.35% to $76.53 a barrel, while West Texas Intermediate, the US equivalent, rose 0.6% to $72.26.
Russian President Vladimir Putin and the country’s Deputy Prime Minister had said further production cuts were unlikely at next month’s OPEC+ meeting.
Asian stocks were subdued, with Hong Kong’s Hang Seng index falling 1.9% while China’s CSI was flat.