Stocks around the world tumbled on Wednesday as U.S. debt ceiling negotiations dragged on without resolution. The New Zealand dollar dropped after the central bank caught markets off-guard by flagging that its tightening cycle is over. Europe’s benchmark STOXX index fell 1.3% to a 3-week low in early trading, while MSCI’s broadest index of Asia-Pacific shares fell 0.7%. Crude oil prices kept rising, however, after a warning from the Saudi energy minister to speculators that raised the prospect of further OPEC+ output cuts.
Treasury Secretary Janet Yellen has warned that the federal government could no longer have enough money to pay all its bills as soon as June 1, raising the risk of a damaging default. Reports that Treasury has asked federal agencies whether they can delay upcoming payments added to the sense of crisis.
In Europe, British inflation data came in stronger than expected, a reminder to investors that the global fight against price rises is far from over. Germany’s 10-year bond yield, the benchmark for the euro zone, climbed to a one-month high of 2.501% before paring its rise slightly.
Gold traded in a narrow range around$1,977 as traders eyed debt ceiling talks and the possibility of further central bank hikes. Crude oil price extended gains from Tuesday, when Saudi Energy Minister Prince Abdulaziz bin Salman warned speculators to “watch out,” saying “they will be ouching.” Brent crude futures rose 58 cents to $77.42 a barrel, while U.S. West Texas Intermediate crude (WTI) gained 70 cents to $73.62 a barrel.