Stock markets rallied across the region on news that top U.S. policy makers had reached the framework for a budget deal that will clear the way for an increase in the U.S. government’s borrowing limit and could help avert a default.
The key indexes in Japan and South Korea jumped 1.3 percent in early trading and picked up steam as the deal was announced by President Barack Obama.
By early afternoon, the Nikkei 225 was up 2 percent, with investors also encouraged by the Japanese currency’s fall against the U.S. dollar after the debt deal.
The U.S. debt woes had undermined the dollar’s value in international currency markets in recent weeks, especially against the yen, which was bad for Japanese exporters, as a strong yen makes their goods more expensive for shoppers overseas.
On today in Tokyo, the dollar bought 77.40 yen, compared to 76.75 yen late Friday in New York.
Echoing the general sense of guarded optimism overseas, Yukio Edano, Japan’s chief cabinet secretary, said the country welcomed the agreement and hoped that it would help stabilize the markets.
Also helping market sentiment was a fresh sign that the Chinese economy may not be slowing as rapidly as feared.
Elsewhere in the region, the Kospi in South Korea gained 1.8 percent, and the benchmark index in Australia jumped 2.1 percent.
In Singapore, the Straits Times index rose 0.6 percent and in Hong Kong, the Hang Seng rose 1.5 percent by early afternoon. In mainland China, the Shanghai composite edged up 0.2 percent.
Wall Street, too, appeared set to recoup some of the past week’s losses, with S.&P. 500 stock futures 1.5 percent higher.
Gold, which has struck multiple record highs recently amid the uncertainty of the past weeks, fell nearly 1 percent to $1,615 per ounce. Oil rose about $1, to $97 a barrel.