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US debt-ceiling breakthrough gives relief to Asian markets

Thursday 02:55 BST

What you need to know

  • South Korea stocks rally
  • Euro in holding pattern ahead of ECB meeting
  • Crude hovers at 3-month high

Overview

Asia Pacific equities rose on Thursday following news that President Donald Trump had reached an agreement with Democratic congressional leaders for a short-term extension to the debt ceiling, which saw the S&P 500 close up 0.3 per cent on Wednesday.

The deal also pushes back a September 30 deadline to pass a budget, in a temporary move to avoid a government shutdown.

Mr Trump backed the Democrats’ proposal for a three-month extension to the debt ceiling that was set to expire this month, despite opposition from top Republicans.

Hot topic

Japanese stocks rose with the Topix index up 0.8 per cent, led by the consumer discretionary and industrials sectors, which were up 1.2 per cent and 1 per cent respectively. Energy stocks also rose 1.1 per cent amid higher oil prices.

Energy stocks boosted Hong Kong’s Hang Seng, with the sector up 0.5 per cent. The Hang Seng index was up 0.5 per cent as the financials and information technology sectors both rose 0.3 per cent. Chinese carmaker Geely popped 4.4 per cent after it reported its August sales volume jumped 80 per cent year on year.

Australia’s S&P/ASX 200 added 0.3 per cent as financials rose 0.4 per cent and energy stocks were up 0.6 per cent. Rio Tinto was up as much as 1.4 per cent after the company announced a 50 per cent increase in reserves at one of its Australian coal mines.

South Korea’s Kospi climbed 1 per cent, heading for its best day since June after Mr Trump said military action was not his “first choice” to deal with North Korea in the wake of Pyongyang’s nuclear test on Sunday.

Forex

The euro was flat at $1.1923 ahead of the European Central Bank’s policy meeting on Thursday. Investors will be looking for details on the banks plans to end its €2tn ($2.4tn) quantitative easing programme and discussion of the single currency’s rise.

The Canadian dollar edged lower to $1.2233 after surging to its highest level in more than two years against its US counterpart following the Bank of Canada’s decision to raise interest rates by 25 basis points.

The dollar index, which measures the greenback against a basket of peers, was down 0.1 per cent at 92.200 and the Japanese yen was a touch stronger against the US dollar at ¥109.11.

Fixed income

The yield on the 10-year US Treasury, which moves inversely to its price, was up 3.3 basis points at 2.092 per cent.

Commodities

International oil benchmark Brent crude was 0.1 per cent lower at $54.13 a barrel after touching its highest level since May 25 in the previous session. West Texas Intermediate was flat at $49.14 a barrel.

Gold was hovering at a 10-month high at $1,334.40 an ounce.

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