Stock markets were mixed on Tuesday, with heavy falls in Europe and muted trading in New York following an agreement to suspend the US debt limit and avoid a painful default.
With traders returning after a three-day weekend, indices in Paris and London both lost more than one percent while Frankfurt dipped 0.3 percent, with markets beginning to assess the deal's prospects as it needs to pass through a highly partisan US Congress.
In the US, the S&P 500 finished flat, with the Dow narrowly negative and the Nasdaq modestly higher.
Benchmark oil prices skidded more than four percent as traders await news on the US public finances and digest conflicting messages from OPEC+ members about new output cuts, analysts said.
Traders are also grappling with signs that China's oil demand is recovering more slowly than expected.
President Joe Biden and House Speaker Kevin McCarthy hammered out an agreement on the US debt ceiling at the weekend that saw both sides give ground, a week before a June 5 deadline when the government could run out of cash to pay its bills.
While the deal provided some relief to markets, the two leaders must convince skeptics within their parties to back it, with the House expected to vote Wednesday followed by the Senate.
After rallying Friday in anticipation of an agreement, markets were muted as far-right Republicans in the House came out against the compromise.
"McCarthy still has some tricky math to get this through the House," said Art Hogan, an analyst at B. Riley Financial.
Still, the US president and House speaker were optimistic.
"I never say I'm confident what the Congress is going to do. But I feel very good about it," Biden said Monday.
Although investors' baseline assumption has been that the United States would avoid a default, markets have been pressured in recent weeks by rising fears that an agreement would not come in time.
"It won't take a lot to disrupt this debt deal, but optimism remains that Congress won't mess with putting the economy at risk of an unnecessary catastrophe," said Oanda's Edward Moya.
In Asian markets, Tokyo extended gains while Hong Kong and Shanghai edged up after recent losses fueled by worries about the Chinese economy as the post-lockdown recovery fades.
But Sydney, Wellington, Taipei, Manila, Bangkok and Jakarta retreated.
Investors are also looking ahead to the US Federal Reserve's next interest rate decision in June after data on Friday showed a key gauge of inflation rising in April.
- Key figures around 2030 GMT -
New York - Dow: DOWN 0.2 percent at 33,042.78 (close)
New York - S&P 500: FLAT at 4,205.52 (close)
New York - Nasdaq: UP 0.3 percent at 13,017.43 (close)
London - FTSE 100: DOWN 1.4 percent at 7,522.07 (close)
Paris - CAC 40: DOWN 1.3 percent at 7,209.75 (close)
Frankfurt - DAX: DOWN 0.3 percent at 15,908.91 (close)
EURO STOXX 50: DOWN 0.7 percent at 4,291.58 (close)
Tokyo - Nikkei 225: UP 0.3 percent at 31,328.16 (close)
Hong Kong - Hang Seng Index: UP 0.2 percent at 18,595.78 (close)
Shanghai - Composite: UP 0.1 percent at 3,224.21 (close)
Euro/dollar: UP at $1.0739 from $1.0708 on Monday
Dollar/yen: DOWN at 139.80 yen from 140.45 yen
Pound/dollar: UP at $1.2404 from $1.2355
Euro/pound: DOWN at 86.48 pence from 86.66 pence
West Texas Intermediate: DOWN 4.4 percent at $69.46 per barrel
Brent North Sea crude: DOWN 4.6 percent at $73.54 per barrel
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