Indian shares fell on Wednesday after hitting five-month highs for three sessions in a row, as caution set in ahead of the U.S. Congress's approval of the debt deal and fresh concerns about China's stuttering economic recovery weighed on the sentiment.
For President Joe Biden, a debt-ceiling victory comes with a bittersweet taste. The White House and top congressional Republican Kevin McCarthy reached a tentative deal for lifting the government’s borrowing limit on Saturday night. Each party championed the deal as a crucial step toward avoiding a sovereign default. But between broad spending caps and stricter rules for food stamps, Republicans have more to celebrate than their Democratic peers. America and its creditors, generally, have even less to be happy about.
The threat of U.S. default isn’t the only thing bringing lawmakers to the negotiating table. After months of wrangling, posturing and volatility, Democrats and Republicans were getting closer on Friday to an agreement that would avoid the world’s largest economy failing to honor its debt – just before the holiday marking the start of summer. That unofficial deadline adds urgency, and also makes it likely that a deal will be no better than just good enough.
Indian shares opened lower on Wednesday, tracking a slide in U.S. and Asian peers, after negotiations over the U.S. debt ceiling continued without a resolution nine days ahead of a potential default.