Asian markets rise as traders welcome US debt deal

Asian markets jumped Monday on news that US President Joe Biden and House Speaker Kevin McCarthy have reached a deal to lift the world's number one economy's debt ceiling and avoid a possible default.

After weeks of wrangling, the two announced that an agreement had finally been reached and urged lawmakers on both sides of the aisle to vote for it before the government runs out of cash on June 5.

However, there is some nervousness on trading floors as the bill contains plenty of elements that are likely to anger Democrats and Republicans alike.

For now, dealers are upbeat as the breakthrough lifts the threat of a debt default by the US that economists warn could hammer the global economy and cause market turmoil.

The bill will suspend the debt ceiling until January 1, 2025 and place curbs on federal spending that will please some Republicans, but it does not deliver the big cuts right-wingers wanted and progressive Democrats would have balked at.

"The agreement prevents the worst possible crisis," Biden said at the White House on Sunday. "Which means no one got everything they want."

"But that's the responsibility of governing. I strongly urge both chambers to pass that agreement."

He added: "It takes the threat of a catastrophic default off the table, protects our hard-earned and historic economic recovery and... represents a compromise that means no one got everything they want."

And McCarthy said: "We know anytime we sit and negotiate with two parties, that you got to work with both sides of the aisle. So it's not 100 percent of what everybody wants."

Hopes that a deal was in the works lifted all three main indexes on Wall Street on Friday, and Asia picked up the baton Monday.

Tokyo rallied more than one percent as did Sydney, while Hong Kong, Shanghai, Singapore, Taipei, Manila and Wellington were also in the green.