Asian shares mostly up as US avoids default
HONG KONG—Asian shares mostly rose Thursday after US lawmakers passed a last-minute bill to reopen the government and raise the country’s borrowing limit, avoiding a devastating default that threatened to spark another global recession.
Investors breathed a sigh of relief as Republican and Democratic senators found a compromise after weeks of bitter rows on Capitol Hill that called into question Washington’s credibility with its creditors, including China and Japan.
Tokyo rose 0.83 percent, or 119.37 points, to close at 14,586.51, Seoul added 0.29 percent, or 6.00 points, to finish at 2,040.61, while Sydney climbed 0.38 percent, or 20.2 points, to end at 5,283.1.
But Hong Kong lost 0.57 percent, or 133.45 points to 23,094.88, while Shanghai closed down 0.21 percent, or 4.53 points, at 2,188.54 as dealers await the release Friday of China’s third-quarter economic growth data.
Global markets had been on tenterhooks over the crisis, which saw Democrats refuse to give in to Republican demands for a new budget to include cuts to President Barack Obama’s flagship healthcare bill.
But with just hours to go before a Thursday deadline to raise the debt ceiling, Senate party leaders reached an agreement to reopen a government that was shut down on Oct. 1, while extending the debt ceiling until the new year.
Congress passed the bill with cross-party support before it was signed by Obama in the early hours.
The bill restarts government operations until Jan. 15 and raises the debt ceiling until Feb. 7, giving lawmakers time to draw up a longer-term deal.
Soon after the deal was announced Obama said: “Once this agreement arrives on my desk, I will sign it immediately.
“We’ll begin reopening our government immediately, and we can begin to lift this cloud of uncertainty and unease from our businesses and from the American people.”
But while the breakthrough has been widely welcomed, equity gains were limited.
“Approval of the debt deal eliminates uncertainties, which is good for the market,” Keisuke Shirasuka, chief fund manager at Mitsubishi UFJ Asset Management, told Dow Jones Newswires.
“However, as the market wasn’t factoring in a US default, shares weren’t oversold. Consequently, the approval will unlikely trigger major buy backs.”
Despite the upbeat news from Capitol Hill Credit Agricole said: “We have a short-term extension but will likely be in a similar ‘crisis’ situation early next year… It’s hard to be optimistic on any easy solution in the negotiations that will take place over the next few months.”
On currency markets the dollar spiked against the yen in early trade, hitting 99.00 at one point, before falling in the afternoon.
The greenback bought 98.00 yen against 98.79 yen in New York Wednesday, while the euro fetched $1.3620 and 133.46 yen compared with $1.3535 and 133.74 yen.
Economists had warned that failure to raise the debt ceiling would have sent the US into a historic default that would have put global markets in a tailspin and sparked a global recession worse than that seen after the 2008 financial crisis.
Washington’s top creditors China and Japan—which between them hold more than $2.4 trillion of US debt—had also called on US lawmakers to get their house in order, saying a default would have devastating consequences.
In oil trade New York’s main contract, West Texas Intermediate (WTI) for delivery in November, was down 55 cents to $101.74 a barrel in afternoon trade, and Brent North Sea crude for December dipped 48 cents to $110.11.
Gold cost $1,306.78 at 1050 GMT compared with $1,282.80 on Wednesday.
In other markets:
— Taipei gained 0.51 percent, or 42.50 points, to 8,374.68.
Taiwan Semiconductor Manufacturing Co. rose 0.94 percent to Tw$107.0 while Hon Hai was 0.27 percent higher at Tw$73.7.
— Wellington advanced 0.36 percent, or 17.23 points, to 4,776.00.
Air New Zealand was up 1.33 percent at NZ$1.52, Fletcher Building eased 0.42 percent to NZ%9.49 and Telecom was flat at NZ$2.28.
— Manila climbed 1.19 percent, or 77.31 points, to 6,560.88.
BDO Unibank added 1.25 percent to 81 pesos, Alliance Global Group put on 2.97 percent to 26 pesos and Universal Robina was up 0.83 percent at 122 pesos.
— Jakarta ended up 0.59 percent, or 26.67 points, at 4,518.93.
Telecom firm Telekomunikasi Indonesia rose 2.20 percent to 2,325 rupiah, while auto maker Astra International fell 2.14 percent to 6,850 rupiah.
— Kuala Lumpur climbed 0.34 percent, or 6.05 points, to 1,797.42.
YTL Power International added 1.1 percent to 1.85 ringgit, while Petronas Chemicals Group fell 0.1 percent to 7.12 ringgit.
— Singapore was up 0.40 percent, or 12.59 points, at 3,186.62.
DBS Bank eased 0.36 percent to Sg$16.51 while Singapore Telecom gained 0.82 percent at Sg$3.70.
— Bangkok gained 0.32 percent, or 4.71 points, to 1,469.09.
Coal producer Banpu fell 3.28 percent to 29.50 baht while telephone company Advance Info Service rose 3.85 percent to 270 baht.
— Mumbai fell 0.64 percent, or 132.11 points, to 20,415.51.
HCL Technologies plunged 6.66 percent to 1,083.15 rupees while rival Tata Consultancy Services was down 4.98 percent to 2,107.70 rupees.—Danny McCord
Originally posted at 05:36 pm |Friday, October 17, 2013
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