CNBC Daily Open: Markets lack conviction

Republican House Speaker Kevin McCarthy leaves the White House after a high-level meeting on the debt ceiling in Washington, D.C., US, May 9, 2023.

Aaron Schwartz | Xinhua News Agency | Getty Images

This report is from today’s CNBC Daily Open, the new newsletter for international markets. The CNBC Daily Open updates investors everything they need to know quickly, no matter where they are. Like what do you see? You can subscribe here.

Markets lacked conviction, while the debate over the US debt ceiling remained simmering with emotional intensity.

  • The presidential and parliamentary elections in Türkiye concluded on Sunday. Neither current President Recep Tayyip Erdogan nor his opposition rival Kemal Kilicdaroglu seem to have crossed the 50% threshold to win outright, according to Reuters. The presidential election run-off is likely to take place on May 28.
  • On the subject of Thailand: The country’s opposition parties, the Move Forward Party and Pheu Thai Party, conducted a strong poll in Sunday’s elections. However, it is not certain if either of them will form the next government due to the rules introduced by the military after the 2014 coup.
  • When it comes to Russia’s invasion of Ukraine, China just wants to win the peace, Ryan Haass, a China expert at the Brookings Institution, told CNBC. A “win” would see China assume the role of a great power with diplomatic power, said Cheng Chen, a political science professor at the University of Albany, State University of New York.
  • forefront Bitcoin lost 11.25% last week, reaching a two-month low of $25,843. Analysts believe that the cryptocurrency may be on the way to a price reversal, as suggested by the head and shoulders pattern – three peaks with a peak in the middle.

Markets lacked conviction, while the debate over the US debt ceiling remained raging with emotional intensity, in the words of Irish poet W.B. Yeats.

US stocks barely fell on Friday. The Dow Jones Industrial Average was flat, the S&P 500 fell 0.16% and the Nasdaq Composite lost 0.35%. On a weekly basis, the Dow Jones lost 1.1%, the S&P 500 was down 0.3%, and the Nasdaq was up 0.4%.

True, some stocks in the S&P bucked the malaise to climb new highs (and plummet to new lows). Pepsico, for example, hit $196.12 a share, its highest level since 1965. On the other hand, Match Group — which owns dating platforms like Tinder, Match and OkCupid — fell to $30.86 a share, its lowest since the IPO. Initial year in November 2015.

But overall, “none of the sectors is making convincing moves either way, reflecting a general lack of conviction in the market,” said Joe Kosick, portfolio specialist and senior vice president at Calamos Investments.

Investors aside, American consumers are also losing faith in the health of the economy. The University of Michigan’s preliminary consumer survey showed an unexpectedly low reading of 57.7 for May, down from 63.5 in April, and the lowest level in six months.

Investors and consumers are hesitant in part because of the prospect of a US debt default. Over the past week, we have heard dire warnings from Jamie Dimon, CEO of JPMorgan Chase, US Treasury Secretary Janet Yellen and even UK Finance Minister Jeremy Hunt about the consequences of a US default. Everyone repeated the same point: If the United States—the center of the global financial system—fails to pay its national debt, economic chaos will explode upon the world.

US President Joe Biden will meet with other lawmakers early this week – after a last-minute delay – to continue talks on the debt ceiling. Investors, bankers, and world leaders alike will soon learn whether the United States can avoid a new crisis.

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