Global equities, US yields fall ahead of debt ceiling vote

(C) Reuters. FILE PHOTO: Men walk past an electric board displaying Nikkei and other countries’ indexes outside a brokerage in Tokyo, Japan January 16, 2023. REUTERS/Kim Kyung-Hoon

By Chibuike Oguh

NEW YORK (Reuters) -Global equities and U.S. Treasury yields were lower on Wednesday as risk-off sentiment dominated markets, with investors focused on a much-anticipated vote in Congress on raising the U.S. debt ceiling.

The U.S. House of Representatives is set to vote on Wednesday on a bipartisan deal that would lift the $31.4 trillion ceiling and allow the government to avert a default.

The bill faces a potentially tricky path through the House, where Republicans hold a slim majority. It is unclear how many House Democrats will back it.

“The jitters are expected as there is a very small chance there could be an issue with the vote later tonight,” said Ryan Detrick, chief market strategist at Carson Group.

“We don’t anticipate that, but until the final paper is signed on the president’s desk some apprehension isn’t abnormal,” he said, adding that month-end profit taking was also underway.

The MSCI world equity index, which tracks shares in 50 countries, was down 1.06%. European’s main sahre index shed 1.07%.

On Wall Street, all three main indexes were lower, led by technology, financial, consumer discretionary and industrial stocks. The Dow Jones Industrial Average fell 0.79% to 32,782.5, the S&P 500 lost 0.79% to 4,172.41 and the Nasdaq Composite was down 0.73% at 12,922.98.

Benchmark U.S. 10-year Treasury yields moved lower to 3.696%.

The U.S. dollar rose to a more than two-month high after data showed that job openings unexpectedly rose in April, pointing to persistent strength in the labour market that could compel the Federal Reserve to raise interest rates again in June.

The dollar index rose 0.577%, with the euro down 0.86% to $1.0641.

Oil prices fell amid demand concerns following weak economic data from top importer China. Brent crude futures for August delivery were down 1.02% to $72.79 per barrel, while U.S. West Texas Intermediate crude (WTI) fell 0.78% to $68.92 per barrel.

Gold prices firmed despite the dollar’s strength, though optimism about a U.S. debt deal kept bullion on course for a first monthly dip in three.

Spot gold added 0.4% to $1,966.09 an ounce, while U.S. gold futures gained 0.75% to $1,972.70 an ounce.