Asian markets mostly rise on US debt ceiling optimism

The yen has come under pressure against the dollar on expectations the Bank of Japan will keep monetary policy ultra loose while the Fed presses on with rate hikes

The yen has come under pressure against the dollar on expectations the Bank of Japan will keep monetary policy ultra-loose while the Fed presses on with rate hikes. AFP/Richard A. Brooks

TOKYO - Hopes that lawmakers are edging closer to a deal to hike the US debt ceiling lifted spirits in Asia on Friday, though traders remain nervous as a deadline to avert a calamitous default draws closer.

Markets have taken a hit in recent days on worries about the slow pace of negotiations in Washington, even after President Joe Biden and House Speaker Kevin McCarthy expressed optimism earlier in the week.

On Thursday, Biden reiterated his pledge that "there will be no default" despite the wrangling, adding that talks with McCarthy, who leads the Republican negotiators, had been "productive".

For his part, the Speaker also expressed his determination to get an agreement to raise the borrowing limit by June 1, when the Treasury has warned the government is expected to run out of cash to service its debts.

"We know where our differences lie," he said. "We do not have an agreement yet. We knew this would not be easy. It's hard, but we're working. And we're gonna continue to work till we get this done."

Reports said the two camps were edging towards a deal that would lift the debt ceiling and cap spending for two years.

Pressure for a deal was ramped up Wednesday after Fitch placed the country's AAA-ranked credit on "rating watch negative" owing to the standoff.

Wall Street had a mixed Thursday, with the Nasdaq and S&P 500 surging higher thanks to a rally in tech firms fuelled by a blockbuster sales forecast from chip giant Nvidia.

And Asian markets mostly rose on Friday.

Tokyo led the way thanks to a weaker yen and softer inflation that had traders betting the Bank of Japan would not tighten monetary policy any time soon.

The dollar on Thursday broke past 140 yen for the first time since November, with strong US data fanning expectations the Federal Reserve will hike interest rates again next month.

Sydney, Seoul, Singapore, Taipei and Jakarta also rose, though Shanghai, Manila and Wellington dipped.

Hong Kong was closed for a holiday.


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