Stalled US debt talks, inflation woes hit stocks

Stalled US debt talks, inflation woes hit stocks

LONDON/NEW YORK - World stocks dropped on Wednesday as U.S. debt ceiling talks dragged on without resolution, stoking a general malaise in markets that saw safe haven assets such as the dollar hold around recent highs.

But crude oil prices bucked the downtrend and kept rising, after a warning from the Saudi energy minister to speculators that raised the prospect of further OPEC+ output cuts.

Negotiators for Democratic President Joe Biden and top congressional Republican Kevin McCarthy were set to reconvene on Wednesday morning, after ending talks on Tuesday with no signs of progress.

Time is running short for a deal, as the Treasury Department has warned that the federal government could be unable to pay all its bills by as soon as June 1 - just eight days away - and it would take several days to pass legislation through the narrowly divided Congress.

The U.S. S&P 500 index shed 0.67% in morning trade, the Dow Jones Index lost 0.6%, and the Nasdaq Composite fell 0.6%. That helped to drag the MSCI world equity index, which tracks shares in 49 nations, down 0.95%.

"Equity markets are now beginning to fret about the debt ceiling debate," said Nicholas Colas, Co-founder of DataTrek Research. "T-bills were