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Asian Stocks Up as U.S. Avoids Immediate Default

Stock MarketsOct 06, 2021 09:57PM ET
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By Gina Lee – Asia Pacific stocks were mostly up on Thursday morning, as progress was made, albeit slowly, on the U.S.’ debt-ceiling impasse.

The yield on the benchmark U.S. 10-year Treasury note edged up, and U.S. shares were up, as progress was made on a possible deal to boost the debt ceiling into December 2021. Although a deal would alleviate the immediate risk of default, tensions between the Democrats and Republicans are far from resolved.

Japan’s Nikkei 225 jumped 1.39% by 9:50 PM ET (1:50 AM GMT) and South Korea’s KOSPI rose 1.28%.

In Australia, the ASX 200 was up 0.58% while Hong Kong’s Hang Seng Index was down 0.57%.

Chinese markets were closed for a holiday, but on the U.S.-China relations front, U.S. President Joe Biden’s plans to meet virtually with Chinese President Xi Jinping before the end of 2021 gave investor sentiment a boost.

Secretary of State Antony Blinken also said that the U.S. Is looking to China “to act responsibly and to deal effectively with any challenges,” as China Evergrande Group's (HK:3333) debt woes continue. However, he also criticized China’s recent military maneuvers around Taiwan.

The ongoing global energy crunch, which sent natural gas prices soaring up as much as 40% at one point, was tamed somewhat by Russian President Vladimir Putin’s offer of help.

Despite the gains, investors remain nervous with the latest U.S. jobs report, including non-farm payrolls, due on Friday. Wednesday’s ADP non-farm employment change for September was a higher-than-expected 568,000.

Investors remain on edge as they calculate the risks, with the report providing clues to the U.S. Federal Reserve’s exact timeline to begin asset tapering.

“We have several things that we are watching right now, certainly the debt ceiling is one of them and that’s been contributing to the recent volatility,” Wells Fargo (NYSE:WFC) Investment Institute head of global asset allocation strategy Tracie McMillion told Bloomberg.

“But we look for these 5% corrections to add money to the equity markets.”

In other central bank news, the European Central Bank is studying a new bond-buying program to prevent any market turmoil when it begins its own asset tapering. The Reserve Bank of India will also hand down its policy decision on Friday.

Asian Stocks Up as U.S. Avoids Immediate Default

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Comments (2)
Fong SH
Fong SH Oct 07, 2021 1:40AM ET
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This US default thingy has been in the news for the last 30 years, what defaults? These are all make up stories to scare the world's financial markets. Please do not use this excuse anymore, it doesn't work anymore, been in this industry for the last 35 years, I was scared off when in my 20s through 30s, now in my 60s, seen and heard enough. lol USD ? it's nothing now.
Dave Jones
Dave Jones Oct 06, 2021 10:07PM ET
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I can almost hear a balloon being inflated
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