Asian Shares Rise On US Debt Deal; Chinese Markets Underperform

Asian stocks advanced on Monday after U.S. President Joe Biden and congressional Republican McCarthy agreed on Saturday to avert an economically destabilizing default by suspending the $31.4 trillion debt ceiling until 2025.

The bipartisan agreement now has to clear a divided Congress before the United States runs out of money to pay its debts in early June.

The dollar held firm on growing expectations of further rate hikes by the Federal Reserve and gold traded flat while oil extended Friday’s gains to recoup some of last week’s losses.

Chinese markets underperformed on doubts over the country’s economic recovery after data showed profits at industrial profits in China fell 20.6 per cent in the January-to-April period from the same period the previous year.

China’s Shanghai Composite index edged up 0.28 percent to 3,221.45 while Hong Kong’s Hang Seng index fell 1.04 percent to 18,551.11.

Japanese shares rallied to reach a fresh 33-year high, with a weaker yen and gains in tech stocks offering support. Exporters were also lifted as the yen dropped to the cusp of 141 per dollar for the first time in six months.

The Nikkei average jumped 1.03 percent to 31,233.54 on optimism over the U.S. debt ceiling deal and a weaker yen. The broader Topix index settled 0.69 percent higher at 2,160.65.

SoftBank Group soared 8.2 percent on reports that its subsidiary Arm had rolled out a new chip technology for mobile devices. Advantest surged 4.1 percent to extend recent gains.

Seoul markets were closed for a holiday. Australian markets rose by the most in nearly seven weeks, with miners and financials leading the surge.

The benchmark S&P/ASX 200 index climbed 62.60 points, or 0.87 percent, to 7,217.40, marking its biggest single-day gain since April 11. The broader All Ordinaries index rose 0.83 percent to 7,395.10.

Mining heavyweights BHP and Rio Tinto rose 1.4 percent and 1.2 percent, respectively while the big four banks gained between 1.2 percent and 1.4 percent. AMP jumped 1.9 percent after announcing executive changes.

Across the Atlantic, New Zealand’s benchmark S&P/NZX 50 index closed 0.89 percent higher at 11,935.65.

U.S. stocks climbed on Friday after reports emerged that lawmakers are closing in on an agreement to raise the U.S. debt ceiling for about two years and avoid a catastrophic default.

In economic releases, inflation and consumer spending accelerated last month, bolstering the case for the Federal Reserve to continue monetary policy tightening.

The tech-heavy Nasdaq Composite and the S&P 500 jumped 2.2 percent and 1.3 percent, respectively to reach their best closing levels in nine months while the Dow gained 1 percent.

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