Business Maverick

Business Maverick

Asian stocks follow US gains on debt-deal optimism: markets wrap

Asian stocks follow US gains on debt-deal optimism: markets wrap
Pedestrians reflected in a window of the Nasdaq MarketSite in New York, US, on Wednesday, 15 June 2022. (Photo: Michael Nagle / Bloomberg via Getty Images)

Asian stocks advanced as optimism over debt-ceiling talks removed one cloud hanging over global markets, allowing investors to refocus on the path for interest rates and the health of the banking system.

A gauge of Asian stocks headed for its biggest gain since March. Japan’s Topix index rose around 1%, putting it on track for a fresh 33-year closing high. Benchmarks in Australia, Hong Kong and South Korea also advanced. 

Nomura Holdings Inc gained even after the company said it would cut its profit forecast, but Tencent Holdings dropped in Hong Kong after the release of its first-quarter results.

US futures were marginally lower in Asia after the S&P 500 and Nasdaq 100 closed near highs of the day, rallying more than 1%. The CBOE VIX index of equity market volatility fell below 17 to close at the lowest level since the start of the month.

President Joe Biden expressed confidence there will be no US default, and House Speaker Kevin McCarthy said reaching an agreement this week is “doable.” JPMorgan Chase & Co. chief Jamie Dimon said the US government “probably” will not default on its debt after he and other bank leaders met in Washington to discuss the debt limit.

“Despite some constructive headlines around negotiations there are risks around the US debt ceiling,” Chris Weston, head of research for Pepperstone Group Ltd., wrote in a note. “If we do see increased market stress in early June, then it will impact EU equity too.”

The dollar and Treasuries were little changed in Asia. That was after the yield on the US two-year note rose seven basis points on Wednesday, while the 10-year yield climbed three basis points to 3.56%.

The yen stayed in a narrow range after Japanese export data for April fell short of estimates. Some emerging-Asian currencies like the Philippine peso and Thai baht pushed higher, paring losses seen earlier in the week.

Aussie jobs

Australia’s dollar dropped after the country reported an increase in unemployment, which reinforced the case for the central bank to stand pat at next month’s policy meeting.

Meanwhile, the Philippine central bank is forecast to hold interest rates at 6.25%. New Zealand’s Treasury Department predicted the country will avoid recession, in a budget released on Thursday.

US regional banks rallied after Western Alliance Bancorp reported growth in deposits boosted sentiment and eased worries about the health of the industry. All members of the KBW Regional Banking index advanced, pushing the benchmark 7.3% higher for its best day since January 2021.

In late trading, Cisco Systems Inc. dropped after the networking company reported its third-quarter results and gave an outlook.

Alibaba Group Holding Ltd. results are due later on Thursday and Walmart Inc. will report in the US.

European Central Bank vice president Luis de Guindos said the ECB has completed most of its tightening but there is still “a way to go”. BM/DM

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