Shares and crude oil spin as US debt deal faces first test by right-wing Congress    

Shares in the US and Europe — including in Frankfurt, London, and Dublin — went into sharp reversal after the $31.4tn US debt deal looked like failing its first test

US president Joe Biden at aq ceremony at Veterans Memorial Park at the Delaware Memorial Bridge in New Castle, Delaware. The days-old debt deal that the White House struck with the right-wing Congress may come unstuck. Picture: Patrick Semansky /AP

Global stock markets were sent into a spin late yesterday as a much-touted deal between US president Joe Biden and Republican leaders in Congress over the US government debt ceiling appeared to be heading for an impasse ahead of a deadline later this week.

Shares in the US and across Europe — including in Frankfurt, London, and Dublin — went into sharp reversal, and the price of crude oil plummeted, after the days-old $31.4tn US debt deal looked like failing its first test in the right-wing Congress.

In London, the Ftse-100 index slumped to an eight-week low “as Friday’s hopes of a swiftly-realised debt ceiling deal are dashed”, said Chris Beauchamp, chief market analyst at online broker IG.

“While it is still likely that a deal will pass Congress without too many hiccoughs, the risk of a delayed passage has meant that stocks have not seen the triumphant progress to the end of May that seemed likely last week,” Mr Beauchamp said.

The pan-European Stoxx-600 index closed almost 1% lower, on track for its steepest monthly fall this year.

After shedding more than 100 points, the Iseq index in Dublin ended 1.2% lower.

The Irish banks, which for international investors act as proxies for the Irish economy, in particular fell sharply in line with their European peers.

AIB shares shed 5% in the session, while Bank of Ireland closed 4.5% lower.

Shares in international packaging giant Smurfit Kappa, which are also sensitive to market concerns over the world economy, fell by 1%, but those in building materials giant CRH were little changed in the latest session.

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The news of opposition to the debt deal from the US is something of a setback for Irish shares which, as tracked by the Iseq index, have staged a strong recovery, and were up almost 20% since the start of the year.

However, in a sign of the investor jitters on the progress of the debt deal through Congress, global crude oil prices tumbled by more than 4% yesterday, as analysts reflected that a faltering deal could only add to the woes of the already troubled global economy struggling with inflation and global interest rate hikes.

Brent crude slid by $3.50 to $73.58 a barrel, as oil traders also looked ahead to the meeting this weekend of the Opec+ group of crude oil producing nations.