Asian shares rise after US Senate clears debt ceiling impasse

Stocks rallied in Asia after the Senate voted to raise the US debt limit, staving off the threat of a government default, as Chinese markets reopened after the national week holiday to positive economic data.

The US Senate voted late on Thursday to extend the public borrowing limit by $480bn to avoid a default for the next two months, delivering relief to investors who had worried a missed payment could arrive within weeks.

A relief rally sent Asian markets higher on Friday on assurances that the world’s most important sovereign debt issuer would not immediately default. Japan’s Topix led the region with a rise of 1.8 per cent, while Australia’s S&P/ASX 200 added 0.8 per cent.

The gains in Asia followed a boost for Wall Street, where the S&P 500 closed 0.8 per cent higher after the Senate vote.

“While not to be taken lightly, the risk of a US debt ceiling breach currently pales in comparison with the tremors being felt in Europe and China,” said Salman Ahmed, global head of macro and strategic asset allocation at Fidelity International.

In China, the CSI 300 index of Shenzhen- and Shanghai-listed stocks reopened from a market holiday this week to rise as much as 1.5 per cent after the privately run Caixin services purchasing managers’ index came in higher than expected at 53.4 for September.

The reading, above the 50 threshold that separates expansion from contraction, indicated solid growth and helped alleviate expectations of another month of decline that had mounted over the market closure.

But new measures to boost Chinese coal production in the wake of an energy crunch and rolling blackouts weighed on coal prices and the shares in the country’s biggest listed miners.

Thermal coal futures trading in Zhengzhou opened almost 3 per cent higher on Friday but reversed course to swing down about 11 per cent after local media reported that energy officials in Inner Mongolia had raised local miners’ coal production capacity by 100m tonnes.

The CSI Coal index of listed Chinese miners fell as much as 5.5 per cent.

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