Asian shares mostly rise on hopes for US debt deal, but China declines

Tokyo, May 19 (BNA): Asian stocks mostly rose on Friday as hopes grew that the US Congress would reach an agreement to avoid defaulting on the country’s debt.

Japan’s Nikkei 225 rose 0.8%, closing at 30,808.35. Australia’s S&P/ASX 200 rose 0.6% to 7,279.50. South Korea’s Kospi index rose 0.9 percent to 2,537.79.

Chinese stocks fell amid renewed fears triggered by signs of an extended lockdown due to the coronavirus pandemic hurting sales. Analysts said that inflationary pressures and geopolitical risks are also weighing on Chinese stocks.

Hong Kong’s Hang Seng fell 1.3% to 19,475.08, while the Shanghai Composite lost 0.4%, to 3,283.60.

“While the broader risk environment has been single-handedly lifted by progress on the US debt ceiling negotiations, Chinese stocks are still struggling for gains,” said Yeap Jun Rong, market analyst at IG.

President Joe Biden, who is now in Hiroshima for a summit of the Group of Seven major industrialized nations, said he was confident of reaching a deal with Republicans to allow the US government to increase the credit limit and borrow more.

Stocks have remained remarkably resilient since early April despite a long list of concerns. One of the main reasons for this is the hope that the Fed will facilitate interest rate hikes, slowing inflation at the cost of risking a recession and demolishing prices in financial markets.

The bet was widely that the Federal Reserve would pause at its next meeting in June. But Lori Logan, president of the Dallas Federal Reserve, dashed some of those hopes in a speech prepared for the Texas Bankers Association.

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Treasury yields rose as traders increased their bets that the Federal Reserve will raise interest rates again at its June meeting, although most still expect a pause.

The yield on the 10-year Treasury rose to 3.64% from 3.57% late Wednesday. The two-year yield, which moves further based on Fed expectations, rose to 4.25% from 4.16%.

In energy trade, US benchmark crude rose 65 cents to $72.51 a barrel. Brent crude, the international benchmark, rose 73 cents to $76.59 a barrel.

In currency trading, the US dollar fell to 138.14 yen from 138.66 yen. The price of the euro was at $1.0786, up from $1.0777.


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