Asian Stocks Rise As Debt Pull Fears Wall Street Rally | Economic news


By YURI KAGEYAMA, AP Business Writer

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.

Japan’s benchmark Nikkei 225 gained 0.5% to close at 27,678.21. The Australian S & P / ASX 200 added 0.7% to 7,256.70. South Korea’s Kospi jumped 1.8% to 2,959.46. Hong Kong’s Hang Seng jumped 2.9% to 24,659.84. 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. The recent problems in China’s real estate sector are another risk, he added.

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“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.

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 frightened 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.

The S&P 500 rose 0.4% to 4,363.55. The Dow Jones Industrial Average 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 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.

In a meeting Wednesday with bank executives, President Biden stressed the importance for Congress of raising the debt ceiling.

“We have not failed to do so since our inception as a country. We need to act. These leaders know the time to act.

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.

The latest episode of market volatility comes as investors question the way forward for the economy, amid rising inflation and the continuing impact of the virus pandemic.

At the top of Wall Street’s list of concerns is the Federal Reserve’s timetable for raising interest rates. The Fed’s policy-making committee recently signaled that the central bank may start raising rates at the end of next year. Analysts said the Fed could act sooner than expected if high inflation persists.

Investors will take a closer look at how companies perform in the third quarter when quarterly financial results are released in the coming weeks. Wall Street expects strong earnings growth of 27% for S&P 500 companies, but will also be listening to comments on how supply chain issues and higher costs are hampering operations.

On Friday, the Ministry of Labor will release its report on employment scheduled for September. The labor market has been slow to fully recover from the pandemic, and the summer upsurge in COVID-19 cases has further hampered its progress.

In energy trading, benchmark US crude slipped 49 cents to $ 76.94 a barrel in electronic trading on the New York Mercantile Exchange. It sold $ 1.50 to $ 77.43 a barrel on Wednesday. Brent crude, the international standard, fell 2 cents to $ 81.06 a barrel.

In currency trading, the US dollar rose from 111.41 yen to $ 111.39. The euro went from $ 1.1557 to $ 1.1570.

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