World markets cheer debt ceiling deal

Asian markets advanced Thursday as U.S. lawmakers approved legislation that will end the government shutdown and raise the debt ceiling.

Japan’s Nikkei rose 1% and the Australia ASX All Ordinaries gained 0.4%. South Korea’s KOSPI added 0.4%.

Hong Kong’s Hang Seng and the Shanghai Composite were both trading in positive territory. U.S. stock futures were little changed.

The Senate passed the measure by a wide margin Wednesday evening, and the House followed suit. President Obama signed the bill into law in the early hours of Thursday.

Senate Majority Leader Harry Reid said Wednesday that the Senate agreement will reopen the government and fund it until January 15. It will also raise the debt limit until February 7, saving the country from defaulting on its bills.

The bill also sets up budget negotiations between the House and Senate for a long-term spending plan.

Stocks rallied in the U.S. on Wednesday as the debt deal took shape. The Dow Jones industrial average jumped more than 200 points, or 1.3%, while the SP 500 and Nasdaq both gained more than 1%.

 

Investors are bound to be relieved by the last-minute measure, which will remove the threat of default and avoid a shock to the global financial system.

With Democrats and Republicans at loggerheads, investors had prepared themselves in recent days for the unthinkable.

Interest rates on short-term Treasuries soared, and big money market funds run by Fidelity, JPMorgan and Charles Schwab reduced their exposure to U.S. debt maturing in late October and November.

The Chicago Mercantile Exchange, which operates the world’s biggest derivatives market, asked investors to stump up more cash to trade in financial products that provide protection against rising interest rates.

Still, risks remain. Some analysts say Congress is merely kicking the can down the road — and a default threat could reemerge in February as the Treasury Department approaches its extended borrowing limit. To top of page

Article source: http://rss.cnn.com/~r/rss/money_topstories/~3/0SX4IvRH9wU/index.html

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