Tokyo stocks up 1.17% by break on US budget deal
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Tokyo stocks up 1.17% by break on US budget deal

Last Updated: Thursday, October 17, 2013, 09:02
 
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Tokyo stocks up 1.17% by break on US budget deal
Tokyo: Tokyo stocks rose 1.17 percent Thursday morning as investors cheered a last-minute deal to reopen the US government and avoid a catastrophic debt default.

The benchmark Nikkei 225 index was up 169.03 points at 14,636.17 by the break, while the Topix index of all first-section shares added 1.00 percent, or 12.01 points, to 1,208.79.

"Approval of the debt deal eliminates uncertainties, which is good for the market," said Keisuke Shirasuka, chief fund manager at Mitsubishi UFJ Asset Management.

"However, as the market wasn`t factoring in a US default, shares weren`t oversold. Consequently, the approval will unlikely trigger major buy backs," he added.

An equity trading director at a foreign brokerage told Dow Jones Newswires: "Markets are reacting rather calmly to what was essentially an expected outcome to the US budget talks."

Tokyo got a strong lead from Wall Street where the Dow rallied 1.36 percent to 15,373.83 on news that US lawmakers had reached a last-minute deal to end the two-week government shutdown and raise the US debt ceiling.

That was followed by Congress passing the bill late Wednesday, averting a debt default.

Investors breathed a sigh of relief as Republican and Democratic senators reached the compromise budget after weeks of bitter debate on Capitol Hill that called into question Washington`s credibility with its international creditors, including China and Japan.

Global markets had been on tenterhooks over the crisis, which saw Democrats refuse to give in to Republican demands for a new budget to include cuts to President Barack Obama`s flagship healthcare bill.

But with just hours to go before a Thursday deadline to raise the debt ceiling, Senate party leaders reached an agreement to reopen a government that was shut down on October 1, while extending the debt ceiling until the new year.

However, some analysts noted that Wednesday`s agreement was only a temporary solution.

"The US budget/debt ceiling drama appears over for now," Credit Agricole said.

"We have a short-term extension but will likely be in a similar `crisis` situation early next year... It`s hard to be optimistic on any easy solution in the negotiations that will take place over the next few months."

On currency markets, the dollar rallied to 99 yen in Tokyo morning trade -- from 98.79 in New York Wednesday -- before settling back to 98.62 yen.



Reuters

First Published: Thursday, October 17, 2013, 09:02


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