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World News | Asian shares follow Wall Street higher on hopes of U.S. debt deal

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Streaks of light seen in California. (Image source: video capture)

BEIJING, May 18 (AP) Asian stocks followed Wall Street higher on Thursday on hopes that U.S. political leaders can strike a deal to avoid a potentially catastrophic government debt default.

Shanghai, Tokyo, Hong Kong and Sydney rose. Oil prices edged lower.

Read also | US: Indian national pleads guilty in multi-million dollar call center scam.

Wall Street rose on Wednesday after President Joe Biden expressed confidence that “America will not default” despite Republican demands to cut aid to poor families to pay for food, health care and rent in exchange for a boost to the amount the government can borrow.

“Markets are now fully pricing in an immediate resolution to the crisis,” ACY Securities’ Clifford Bennett said in a note. “Nobody wants to sell before a deal is announced.”

Read also | Pratima Bhullar Maldonado, an Indian-American policewoman, has become the highest-ranking South Asian in the NYPD.

House Speaker Kevin McCarthy said on Tuesday that the two sides are far apart but could reach a deal by the end of the week. If the US government does not agree to raise its borrowing limit by June 1, they will run out of cash.

Any disruption to U.S. government borrowing and debt payments could send shockwaves through the global financial system.

Treasuries, considered the safest assets in the world, influence the price of private-sector borrowing.

The Shanghai Composite rose 0.6 percent to 3,302.46 and Tokyo’s Nikkei 225 gained 1.5 percent to 30,533.64. Hong Kong’s Hang Seng rose 1.3% to 19,807.06.

Seoul’s Kospi rose 0.6% to 2,509.30 and Sydney’s S&P-ASX 200 rose 0.6% to 7,239.60.

Markets in New Zealand and Southeast Asia also rose.

On Wall Street, the benchmark S&P 500 rose 1.2% to 4,158.77 on Wednesday.

The Dow Jones Industrial Average rose 1.2% to 33,420.77. The Nasdaq Composite rose 1.3% to 12,500.57.

Shares of companies that get most of their revenue from the federal government rose on Wednesday, so they could lose a lot if they can’t pay their bills. Shares of military contractor Lockheed Martin rose 2.1%. Northrop Grumman rose 2.7%.

Congressional negotiators and the White House are arguing over Republican demands for spending cuts, limits on spending growth or job demands for social programs. The Republican plan would block Biden’s proposal to forgive some student debt and would eliminate tax credits to promote clean energy and combat climate change.

Traders are already pricing in at least a brief U.S. recession this year after raising interest rates to curb stubbornly high inflation by cooling business activity.

Investors also worried about the health of global banks following three high-profile failures in the United States and Switzerland.

Banks were squeezed as an unexpectedly rapid rise in interest rates sent market prices for bonds on banks’ books down.

On Wednesday, Western Alliance Bancorp recovered some of its losses after updating its deposit levels. It rose 10.2%, but was still down 41.6% for the year.

Another lender under scrutiny, PacWest Bancorp , rose 21.7 percent, paring losses for the year to about 75.8 percent.

In energy markets, benchmark U.S. crude fell 18 cents to $72.65 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.97 to $72.83 on Wednesday. Brent crude, the price basis for international oil trades, fell 16 cents to $76.80 a barrel in London. It rose $2.05 to $76.96 in the previous session.

The dollar fell to 137.46 yen from 137.61 yen on Wednesday. The euro rose to $1.0846 from $1.0838. (Associated Press)

(This is an unedited and auto-generated story from a Syndicated News feed, the content body may not have been modified or edited by LatestLY staff)


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