A potential six-week breathing space for US lawmakers to
agree to extending the country's debt ceiling limit saw global
stock exchanges soar in response, with the New York's Stock
Exchange posting its largest one-day gain for more than 21
months on Thursday (US time).
Bourses around the world have been steadily declining during
the past fortnight as the impasse between US President Barack
Obama and his Democrats and Opposition Republicans
intensified, with next Thursday's imminent deadline spooking
The US carries $US16.7 trillion ($NZ20.1 trillion), its
maximum debt limit, and requires a law change by Thursday to
extend that limit or potentially face defaulting on debt
repayments. Some of several hundred thousand US Government
employees put on unpaid leave have been ordered back to work
Craigs Investment Partners broker Chris Timms noted the
volatility of the major bourses had not flowed entirely
through the New Zealand exchange, which was buffered by the
dividend payout period at present, with investors holding on
The New Zealand exchange rose yesterday.
''The Republicans have been hardline against Obama's
healthcare [policy], but have offered the first olive branch,
with no strings attached, at this stage,'' Mr Timms said.
He said the possible six-week ''breathing space'' would allow
the Republicans and Democrats time to finalise and approve
the country's budget, and also reset the debt ceiling limit.
However, he cautioned that while the Republicans appeared to
have softened their stance, the weeks ahead would reveal what
conditions they sought, in return for backing Obama's agenda.
Forsyth Barr broker Andrew Rooney said US benchmark indices
had rallied the most since January, in anticipation US
lawmakers could reach agreement to increase the debt ceiling
and avoid default.
China is the largest foreign holder of US Government debt and
Premier Li Keqiang reiterated his country's concern about the
debt ceiling problem when he spoke with US Secretary of State
John Kerry at an Asian summit in Brunei on Thursday,
according to China's official Xinhua news agency.
The state-run China Daily newspaper in Beijing blasted ''the
astonishing failure'' of the US Congress.
''It is pitiful that the US is now putting the fragile world
recovery under renewed threat with its mind-boggling
political infighting,'' it said.
Bourses at a glance
• Dow Jones +2.02%
• Nasdaq Composite+1.99%
• Standard & Poor's 500+1.97%
• Canada TSX +1.54%
• UK FTSE 100+1.46%
• Germany Dax 30 +1.99%
• France Cac 40 +2.21%
• Singapore Straits Times+0.48%
• South Korea Kospi -0.7%
• China Shanghai Composite -0.94%
• Japan Nikkei +1.12%
• Hong Kong Hang Seng-0.36%
• New Zealand SE 50 +0.14%
• Australia All Ords -0.10%
• S&P 200 -0.11%
- Additional reporting AFP.