Breaking News
Investing Pro 0
⏰ React to the Market Faster with Custom, Real-Time News Get Started

Debt ceiling battle, gas prices tumble, Didi relieved - what's moving markets

Economy Jan 16, 2023 23:31
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.
 
EUR/USD
-0.65%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
GBP/USD
-0.44%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
STOXX50
-1.82%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
HK50
-0.67%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
CL
-1.09%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
NG
+1.25%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Geoffrey Smith 

Investing.com -- House Speaker Kevin McCarthy calls for spending cuts at the start of a week when the U.S. is set to bump against the federal debt ceiling. The World Economic Forum begins at Davos but there are big China- and Russia-shaped holes in the delegate lists. U.S. stocks are closed for the MLKD holiday but China and Europe advance as natural gas prices plummet and regulators cut more slack to China's beleaguered tech sector. Here's what you need to know in financial markets on Monday, 16th January. 

1. U.S. braces for debt ceiling battle 

The U.S. House of Representatives is bracing for a bitter struggle over the federal debt ceiling. While the issue is usually one of political theater that tends to be resolved before the country shoots itself in the foot with a voluntary default, things may turn out a little differently this time.

Toughness on spending plans and debt levels was one of the conditions extracted from new House Speaker, Kevin McCarthy, in return for the support of Republican hard-liners.  

The government will hit the Congressionally-approved ceiling on Thursday, Treasury Secretary told both parties in a formal letter last week. After that, it will implement emergency measures to continue operating, but these will be exhausted by June. That timeline suggests nearly five months of effective paralysis on Capitol Hill as the two parties indulge in their usual game of trying to shift the blame.

McCarthy said at the weekend the GOP, which took back control of the House in November’s mid-term elections, will require spending cuts in return for agreeing to raise the ceiling.

2. A depopulated Davos 

The World Economic Forum begins in Davos, with a line-up that reflects the setbacks suffered by globalization in the last couple of years.

The glitzy gabfest for business and political leaders will feature no delegations from either China or Russia, a result of the U.S.’s increasing estrangement from the former and the breaking of most diplomatic bridges with the West by the latter with its invasion of Ukraine.

A resolution to the Ukraine conflict seems as far away as ever after a Russian missile strike on a residential building in Dnipro at the weekend killed 35 civilians.

There were also signs that Ukraine’s western allies were moving closer to sending it main battle tanks, a step that they have so far shied away from for fear of escalating the conflict further. The U.K. announced it will send 12 Challenger 2 tanks, while Germany’s Defense Minister Christine Lambrecht – who has resisted approving the dispatch of Leopard 2 tanks to Ukraine – resigned.

3. Stocks in Europe and China advance; U.S. shut for MLK day

Global stocks were mixed in the absence of a clear lead from the U.S., something likely to last all day due to the Martin Luther King Day holiday there.

By 06:25 ET (11:25 GMT), the Euro Stoxx 50 index was up less than 0.1% while the broader Stoxx 600 index was up 0.2%.

Hopes that Europe will avoid an economic contraction this year have risen in recent days as natural gas prices have collapsed and the euro and pound have strengthened, two factors that will greatly reduce the pressure from imported inflation and reduce the need for more aggressive interest rate hikes from the Bank of England and European Central Bank.

4. Didi back in Beijing's good graces

Chinese stock indices rose strongly again overnight, with most of the main boards gaining around another 1.5% after ride-hailing business Didi (OTC:DIDIY) said it had received permission from Beijing to start registering new customers again. The Hang Seng Technology index, which has gained over 60% in the last three months, nonetheless paused for breath, losing 1.1%.

The ban on new customers, imposed by the Cyberspace Administration of China 18 months ago, had been a key moment in China’s clampdown on the wealth and power of China’s Internet moguls, forcing Didi into an ignominious delisting from the New York Stock Exchange only a few months after its IPO there.

The reversal of the ban is the latest evidence of Beijing easing the pressure on the Tech sector in recent weeks, and follows such steps as the granting of permission for financial services Ant Group to proceed with capital raising measures.

5. Oil edges down as European gas prices slump again

Crude oil prices fell on signs that the expected pickup in Chinese demand may take a little longer to materialize than thought, although the trigger related to a slightly different market.

Reports suggested that Chinese gas traders are diverting cargoes of liquefied natural gas to Europe amid high levels of storage that point to subdued industrial demand at home.

The same reports drove benchmark European gas prices sharply lower again. The Dutch TTF contract fell 11.2% to a new 16-month low of €57.61 a megawatt-hour (€1=$1.0827), as German Vice-Chancellor and Energy Minister ruled out a repeat of last year’s spike.

Debt ceiling battle, gas prices tumble, Didi relieved - what's moving markets
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email