Asian markets mostly up after Biden-McCarthy US debt deal

Asian stocks are 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, though the move requires the Congressional approval.

Tokyo, Sydney and Shanghai advanced while Hong Kong fell. Seoul markets were closed for a holiday.

The US debt deal mitigated what had been a potentially huge threat to markets around the world. Biden and McCarthy worked over the weekend to try to secure enough support in Congress to pass the measure before the June 5 deadline and avoid a disruptive federal default.

“Markets are reacting cautiously so far. Buoyant, but cautious,” Clifford Bennett, chief economist at ACY Securities, said in a commentary.

“This agreement only moves the issue to potentially more politically favorable times after the presidential election in two years. Nothing is certain in this regard, and it is possible that resolution will be even more difficult as ‘She never was on this occasion,’ Bennett said.

Tokyo’s Nikkei 225 index jumped around 2% in early trading but closed 1% higher at 31,333.54. The S&P/ASX 200 in Sydney jumped 1% to 7,223.70. The Shanghai Composite Index edged up 0.2% to 3,219.41.

In Hong Kong, the Hang Seng slipped 0.8% to 18,602.10.

Taiwan’s benchmark index gained 0.8% while India’s added 0.7%.

US markets will be closed for a holiday on Monday. Investors have another busy week of U.S. economic updates ahead, including consumer confidence and employment data.

Tech stocks generated strong gains for Wall Street on Friday after chipmaker Marvell Technology jumped a record 32.4% after the chipmaker said it expects revenue of AI in fiscal year 2024 at least double from the prior year. On Thursday, fellow chipmaker Nvidia soared after making big predictions for upcoming AI-related sales.

The S&P 500 rose 1.3% to close at 4,205.45. The Dow Jones Industrial Average gained 1% to 33,093.34. The tech-heavy Nasdaq posted the biggest gains, jumping 2.2% to 12,975.69. The index rose 2.5% over the week.

The revolutionary field of AI has become a hot topic. Critics warn it’s a potential bubble, but proponents say it could be the last revolution to reshape the global economy. The country’s financial watchdog, the Consumer Finance Protection Bureau, said it is working to ensure companies follow the law when using AI.

Wall Street and the broader economy already had a full list of concerns before the threat of a US default on its debt was clearly highlighted on the list.

A key measure of inflation that is closely watched by the Federal Reserve beat economists’ expectations in April.

Persistent inflationary pressure is complicating the Fed’s fight against rising prices. The central bank has been raising interest rates aggressively since 2022, but recently signaled it would likely forgo a rate hike at its meeting in mid-June. The government’s latest inflation report raises concerns about the Fed’s next move.

The latest inflation data also highlighted the continued resilience of consumer spending, which has been a key bulwark, along with the strength of the job market, against a recession. The economy grew at a sluggish 1.3% annual rate from January to March and is expected to accelerate to a 2% pace in the current April-June quarter.

The impact of inflation and fears of a looming recession weighed on corporate earnings and forecasts. The latest round of corporate earnings is coming to an end, with S&P 500 corporate earnings contracting about 2%.

Beauty products company Ulta Beauty fell 13.4% after revising its profit margin forecast. Discount retailer Big Lots fell 13.3% after reporting a much bigger loss last quarter than analysts had expected.

Investors rewarded several companies that published strong financial results. Gap rose 12.4% after posting a strong first-quarter profit.

In other trading on Monday, benchmark U.S. crude oil added 40 cents to $73.07 a barrel in electronic trading on the New York Mercantile Exchange. It took 84 cents to $72.67 a barrel on Friday.

Brent crude, the standard for international trade, advanced 35 cents to $77.33 a barrel.

The dollar slipped to 140.34 Japanese yen from 140.59 yen. The euro fell from $1.0724 to $1.0741.

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