By Daniel Inman
Asian stocks rose sharply on Friday, with Australia leading the
gains, as signs of progress in the U.S. budget stalemate provided
relief to markets.
Hopes of a budget deal in Washington led stocks on Wall Street
to enjoy their biggest one-day gain since January, with this
positive sentiment extending into Asia on Friday.
The rally came after House Republicans said that they will offer
a six-week extension to the nation's borrowing limit in exchange
for negotiations on spending.
Australia's S&P/ASX 200 jumped 1.6%, Hong Kong's Hang Seng
Index rose 1.4% and Japan's Nikkei rose 1.3%.
The yen (USDJPY) softened slightly early Friday, as the dollar
added to its overnight 0.8% rise against its Japanese counterpart.
The greenback last traded at Yen98.39, compared with Yen98.16 late
Thursday in New York.
Gains in Asia did not quite match the sharp moves on Wall
Street, where the Dow Jones Industrial Average (DJI) shot 2.2%
higher on Thursday.
"Asia didn't come down as much," said Shane Oliver, head of
investment strategy and chief economist at AMP Capital in Sydney.
"It is also clear that the negotiations might go on for a while and
a solution might not be found soon."
Southeast Asia lagged slightly behind, with Indonesia's JSX up
0.8% and Singapore's Strait Times index rising just 0.5%. In China,
the Shanghai Composite added 0.6%.
The political impasse in the U.S. has been a constant theme for
global markets throughout the week, though Asia has been resilient
to the declines and more receptive to good news. Japan and
Southeast Asian markets were able to end the week with respectable
gains, with the Nikkei up 2.5% since last Friday and Indonesia 3.2%
higher over the same period.
On Tuesday, regional stocks shook off early weakness after
Shanghai came back online with a healthy gain after a week-long
public holiday. There was a similar story on Wednesday, as markets
reacted well to news of the nomination of Janet Yellen to succeed
Federal Reserve Chairman Ben Bernanke.
The negotiations in Washington remain incomplete, while Japan
and Hong Kong were both heading into a long weekend with public
holidays on Monday. This means that investors in Tokyo and Hong
Kong will have to wait until Tuesday to react to any weekend
developments.
Hong Kong will also be waiting until Tuesday to respond to a
batch of Chinese economic data, with trade and inflation numbers
coming out over the weekend and on Monday, which will provide
investors with an opportunity to see whether strong data to come
out of China in recent months has carried on to September.
In corporate news, the retail sector was in focus in Japan, as
Fast Retailing Co. dropped 4.6% after the firm released a
disappointing outlook for the current business year. The company
behind the Uniqlo chain of shops remains up 46% year-to-date.
Department store operator Takashimaya Co. added 1.7% in Tokyo after reporting solid earnings.
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