Asian shares were mostly higher after President Joe Biden and House Speaker Kevin McCarthy reached a final agreement on a deal to raise the US national debt ceiling, although the measure needs to be approved by Congress.
Tokyo, Sydney and Shanghai rose while Hong Kong fell. Markets in Seoul are closed for a holiday.
The U.S. debt deal has eased what was once a huge potential threat to markets around the world. Biden and McCarthy worked over the weekend to try to ensure there was enough support in Congress to pass the measure by the June 5 deadline and prevent a disruptive federal default.
“The market has so far reacted cautiously. Excited, but cautious,” Clifford Bennett, chief economist at ACY Securities, said in a commentary.
“This agreement just puts the matter at a potentially more politically friendly time after the Presidential election in two years. Nothing is certain about this and it is possible that the resolution will then be there. It’s even more difficult than it is right now,” Bennett said.
Tokyo’s Nikkei 225 index was up about 2% in early trading but closed 1% higher, at 31,333.54. The S&P/ASX 200 in Sydney rose 1% to 7,223.70. The Shanghai Composite Index rose 0.2 percent to 3,219.41.
In Hong Kong, Hang Seng fell 0.8% to 18,602.10.
Taiwan’s benchmark is up 0.8% while India’s benchmark is up 0.7%.
US markets will be closed for a holiday on Monday. Investors will have a busy week with US economic updates ahead, including data on consumer confidence and jobs.
On Friday, tech stocks delivered solid gains for Wall Street after chipmaker Marvell Technology rallied a record 32.4% after the chipmaker said it expects AI revenue in the second half of the year. fiscal year 2024 will be at least double that of the previous year. On Thursday, chipmaker Nvidia spiked after making a big forecast for upcoming AI-related sales.
The S&P 500 rose 1.3% to close at 4,205.45. The Dow Jones Industrial Average rose 1% to 33,093.34. The tech-heavy Nasdaq posted the biggest gain, rising 2.2% to 12,975.69. The index is up 2.5% for the week.
The field of revolutionary AI has become a hot issue. Critics warn it’s a potential bubble, but advocates say it could be the latest revolution to reshape the global economy. The nation’s financial watchdog, the Consumer Financial Protection Bureau, says it is working to ensure that companies comply with the law when they use AI.
Wall Street and the broader economy had an exhaustive list of concerns before the threat of a US default became prominent on the list.
A key measure of inflation closely watched by the Federal Reserve ticked higher than economists expected in April.
Persistent pressure from inflation complicates the Fed’s fight against high prices. The central bank has been actively raising interest rates since 2022, but recently signaled that it will likely forgo raising rates when it meets in mid-June. The government’s latest report on inflation is raising concerns about the Fed’s next move.
The latest inflation data also underscores the continued resilience of consumer spending, which has been a key bulwark, along with a strong job market, against a recession. The economy grew at a slow 1.3% annual rate from January to March and is expected to accelerate to a 2% pace in the current quarter from April to June.
The impact of inflation and worries about an impending recession have hit companies’ profits and forecasts. The company’s latest earnings round is coming to an end with profits for companies in the S&P 500 shrinking about 2%.
Beauty products company Ulta Beauty fell 13.4% after cutting its profit margin forecast. Discount retailer Big Lots fell 13.3% after reporting a loss last quarter that was much larger than analysts had predicted.
Investors reward certain companies that report good financial results. Gap rose 12.4% after reporting strong first-quarter profit.
In another session on Monday, benchmark U.S. crude rose 40 cents to $73.07 a barrel in electronic trading on the New York Mercantile Exchange. It rose 84 cents to $72.67 a barrel on Friday.
Brent crude, the benchmark for international trading, rose 35 cents to $77.33 a barrel.
The dollar slid to 140.34 Japanese yen from 140.59 yen. The euro rose to $1.0741 from $1.0724.
