U.S. stocks gain on hopes for debt ceiling breakthrough

Stocks and commodities climbed as investors bet that U.S. politicians will be able to negotiate a solution to the debt-ceiling standoff, with President Joe Biden voicing optimism that a deal could be reached.

S&P 500 futures climbed 0.4 per cent, signaling a rebound from Friday's retreat. Other markets tilted risk-on, with copper advancing and mining shares leading gains among European stocks. South Africa's rand jumped on signs that a diplomatic row with the US is softening. 

The U.S. debt ceiling remains the biggest focus for investors this week and strategists are warning about market turmoil and economic disaster if politicians don't agree to raise the government's US$31.4 trillion borrowing limit. Joe Biden, House Speaker Kevin McCarthy and other congressional leaders are planning to hold further talks on Tuesday. They were previously scheduled to meet on Friday, but postponed it as staff level discussions continued throughout the weekend.

“When you look from afar in Europe at American politics right now it is difficult to see how they get to common ground, but the alternative is so bad maybe it forces that ground to be found,” said Luke Hickmore, investment director at Abrdn. “The risks are still there for sure.”