Asian stocks rise as debt pullback fears boost Wall Street rally
TOKYO (AP) – Asian stocks rose on Thursday, following a rally on Wall Street after signs of progress in resolving the congressional deadlock over the debt ceiling.
The Japanese reference Nikkei 225 NIK,
gained 1.6% in morning trade to 27,972.58. the Australian S & P / ASX 200 XJO,
added 0.8% to 7,262.30. Kospi 180721 from South Korea,
jumped 1.3% to 2,944.57. Hang Seng HSI from Hong Kong,
jumped 2.2% to 24,491.36. The trade was closed in Shanghai for a Chinese national holiday.
Stephen Schwartz, senior director of Fitch, said he believes the regional economy will start to recover with growing vaccination efforts in Asia, which means restrictions to curb the spread of the coronavirus will be lifted.
But South and Southeast Asia, where vaccination deployment has been delayed, remains vulnerable to the “pandemic setbacks” of COVID-19. Another risk is the recent problems in China’s real estate sector, he added.
“The slowdown in growth in China, along with the expected reduction from the US Fed, could have broader negative repercussions, especially for emerging and frontier markets in the region,” he said.
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Japan’s economic outlook also remains bleak as new Prime Minister Fumio Kishida delivers his first political speech later this week. Although he has promised to raise revenues, he did not give details and is not widely seen as a supporter of the regulatory and structural changes that analysts have long said Japan badly needed. Some skeptics fear that any new spending will only push the country into further debt.
Kishida also scared off investors by voicing his support for a capital gains tax.
In the United States, investors are hoping Congress can manage to temporarily extend the federal government’s debt ceiling and give lawmakers time to reach a more permanent resolution. The market recovered from a morning loss shortly after Republican Senate Leader Mitch McConnell offered Democrats a short-term emergency extension of the federal debt ceiling until December.
Financial markets have mostly taken the debt ceiling drama in stride, expecting another 11-hour fix, but some voices on Wall Street have recently warned investors to prepare for a default even though unlikely, given how extremely damaging this would be to the economy. and markets.
“People were worried about the debt ceiling,” said Jay Hatfield, CEO of Infrastructure Capital Advisors.
The S&P 500 SPX,
rose 0.4% to 4,363.55. Gains in tech stocks, houseware makers and communications companies helped offset losses in energy and other sectors. About 57% of stocks in the index rose.
The Dow Jones Industrial Average DJIA,
rose 0.3% to 34,416.99. The Nasdaq gained 0.5% to 14,501.91. The technology-heavy index fell 1.2% before the afternoon rally.
Small company stocks, a sign of confidence in economic growth, fell: the Russell 2000 RUT index,
fell 0.6% to 2,215.
If the country’s debt ceiling, which caps the amount of money the federal government can borrow, is not raised by October 18, the country “would likely face a financial crisis and economic recession.” Treasury Secretary Janet Yellen told Congress last week.
The Senate went on recess Wednesday night so lawmakers could discuss McConnell’s proposal, delaying a procedural vote on a bill passed by the House to suspend the debt ceiling.