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Global Markets Respond Positively To Debt Deal News

8-1-11

By LGR Financial News Staff

Global markets responded favorably to the news of an apparent end to the debt ceiling crisis in Washington late Sunday with shares in Asia jumping nearly two percent and early signs pointing to a big rise at the opening bell on Wall Street.

As trading day began in Asia, Japan’s Nikkei 225 index was up 170 points, or about 1.7 percent. The Standard & Poor’s 500/ASX 200 index, a measure of Australia’s blue-chip stocks, rose 1.95 percent after opening up 0.36 percent before the announcement.

Singapore’s benchmark Straits Times index began trading up 0.77 percent, while South Korea’s benchmark KOSPI edged up 1.69 percent and Hong Kong’s Hang Seng index moved 1.49 percent higher.

Futures contracts predicting the open in New York suggested the Dow could open up close to 200 points, or about 1.5 percent.

However, many big investors still remained cautious after the deal was announced by President Barack Obama Sunday Evening, as it remains far from certain that the debt ceiling deal will help the United States avoid losing its triple-A credit rating for the first time in history. Analysts also warn that there are still risks for the US economy and investors will be closely monitoring jobs numbers due out next Friday.

The debt deal hammered out by the White House and Congressional Leaders on Sunday involves raising the debt ceiling through the end of 2012, there will be $1 trillion in spending cuts over the next 10 years ($100 billion per year), a bi-partisan “super-committee” comprised of one member of each party from each chamber of Congress will be set up to determine how to best reduce spending and stimulate our economy to report back before November for a vote. Everything will be on the table in this committee.

The deal still needs approval from the full Congress, with the Senate vote tentatively set for 1 p.m. Eastern time on Monday and if it passes, a House vote to be held later in the day.

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