European shares open higher after agreement on US debt ceiling

Manufacturing activity in France rose 0.7% in April, after a 1.1% drop in the previous month, official statistics showed. Total industrial activity increased by 0.8%

Production in the period February-April was also 1.6% higher than a year ago.

However, French statistics agency Insee said energy-intensive industry remains vulnerable to higher production costs.

The figures also showed the impact of French refinery strikes, which were at their most severe in March. April production of coke and refined petroleum increased by 23.6% after a fall of 45.2%.

Separately, investors are awaiting an S&P announcement on France̵[ads1]7;s credit rating on Friday, which could see it downgraded from an “AA” rating.

– Jenny Reid

European markets open higher on Friday, according to data from IG.

Britain’s FTSE 100 looks set to open 20.7 points higher at 7,518; Germany’s DAX 91.5 points higher at 15,942; France’s CAC 37.4 points higher at 7,169; and Italy’s MIB up 115 points to 26,697.

– Jenny Reid

The Senate on Thursday night passed a bill to raise the debt ceiling, sending it to President Joe Biden’s desk.

He is expected to sign the legislation on Friday, preventing what would have been the first ever US national debt.

The House-approved compromise passed the Senate by a 63-36 margin, garnering enough bipartisan support to overcome the chamber’s 60-vote threshold to avoid a filibuster.

US stock futures were slightly higher before the vote and held at those levels after the bill passed. Futures tied to the Dow Jones Industrial Average were up about 30 points.

— Christine Wang, Christina Wilkie

Oil prices traded slightly above flatline as traders look towards an OPEC+ meeting this weekend.

Global benchmark Brent was 0.2% lower at $74.44 a barrel on Friday, while US West Texas Intermediate futures were down 0.24% at $70.27 a barrel.

“If [OPEC] don’t do anything, we can really see prices sell off, we’ve seen them sell off this week,” Kpler’s lead oil analyst Matt Smith said.

The oil cartel is unlikely to reinforce output cuts in the upcoming meeting, Reuters reported citing alliance sources.

Smith predicts that Brent prices could fall to $70 a barrel if OPEC maintains the status quo.

“Oil prices fell sharply in May, with the WTI benchmark falling below USD70/b,” HSBC wrote in a report dated June 1. The bank noted that the decline came despite the previously announced OPEC+ production cuts taking effect during the month.

Apart from the uncertainty that had swirled around the US debt ceiling, China’s subdued growth indicators also weighed on prices, the report noted.

– Lee Ying Shan

Global revenue from artificial intelligence will reach $180 billion this year and grow to nearly $2 trillion by 2030 – and it will be a key driver of semiconductor revenue, Morgan Stanley says.

Investors are already buying into the AI ​​buzz. Nvidia shares rose last week after they reported earnings that beat expectations.

Morgan Stanley mentions a stock that will be a “key beneficiary of NVDA’s AI capability.”

CNBC Pro subscribers can read more here.

— Weizhen Tan

Data on nonfarm payrolls, unemployment and hourly wages on Friday will highlight the challenges the Fed faces heading into its June policy meeting, according to Joe Davis, chief economist at Vanguard.

Economists polled by Dow Jones expected nonfarm payrolls to rise by 190,000 in May, which would be a smaller monthly increase than the 253,000 added in April. They forecast unemployment at 3.5%, slightly higher than the 3.4% seen in April.

Hourly wages are expected to grow 0.3% on a monthly basis and 4.4% compared to the same month last year. In April, wages rose 0.48% month-on-month and 4.45% year-on-year.

“We think tomorrow’s labor market report will underscore the challenges the Fed continues to face in its push to drive inflation back toward target,” Davis said. “We remain of the view that they should raise interest rates in June to enforce their decision before pausing for a while to assess the impact on macro conditions, although the most important aspect of our outlook remains that the Fed is on hold through at least the end of the year.”

“Indications of continued labor market tightness in tomorrow’s report will provide further support for these views,” he added.

– Alex Harring