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Wall Street closed lower on Tuesday as negotiations over the debt ceiling appear to be making little progress. Monday’s meeting between President Biden and House Speaker Kevin McCarthy was productive with President Biden saying a default was off the table, however no set resolution has been decided yet. The S&P500 dropped 1.12%, the Dow Jones fell 0.69% and the tech-heavy Nasdaq lost 1.26%. And in Europe, markets closed lower on Tuesday as investors in the region also keep a close eye on US debt ceiling negotiations, whereby talks continue with no clear resolution in check yet. The Eurozone composite purchasing managers’ index for May showed solid growth that continues to be driven by services, with manufacturing hit by a weak demand and fall in selling prices according to CNBC. Germany’s DAX fell 0.44% on Tuesday, the French CAC lost 1.33%, and, in the UK, the FTSE100 fell 0.1%.
The local market had a lacklustre session yesterday as a more than 1% loss in the consumer discretionary sector offset strong gains for financial and real estate stocks. Markets have been moving over the last week in line with progress and lack there of negotiations in debt ceiling talks between US President Joe Biden and House Speaker Kevin McCarthy. As negotiations on Tuesday were inconclusive, investor optimism took a slide and caused the negative end to a lacklustre session on the ASX. Qantas shares dipped over 2% on Tuesday despite the flying kangaroo forecasting it would reach up to $2.5bn in pre-tax profit for the 2023 financial year. Investor sentiment in the airline was shaken by the warning that softening fuel prices would put downward pressure on airfares, which in-term will cause a reduction in margins for Qantas. There is also more capacity coming online post-pandemic both through Qantas’ new fleet and as international carriers ramp up operations back into Australia, which will also contribute to the downward pressure on Qantas airfares in the highly competitive market.
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