Asian markets mostly higher on US fiscal hopes
Asian markets mostly rose on Tuesday morning, taking a lead from Wall Street as dealers grow confident US lawmakers will reach an agreement to avert the fiscal cliff.
Continued weakness of the yen helped send Japanese shares surging for a second straight session as Shinzo Abe prepares to take over as prime minister, vowing to press a more aggressive policy of monetary easing.
Tokyo rose 1.02 per cent, Sydney climbed 0.78 per cent, Hong Kong added 0.19 per cent, Seoul was up 0.17 per cent and Shanghai was flat.
Traders were reacting to news progress was finally being made in talks on a new deficit-cutting budget to replace the tax hikes and spending cuts due to come into effect at the start of January and which would likely tip the US economy into recession.
President Barack Obama hosted top Republican lawmaker John Boehner in the White House for 45 minutes Monday in the latest effort to avert going over the so-called fiscal cliff.
The meeting follows news that Boehner had changed his position on not allowing any more taxes, saying at the weekend that he would agree to some hikes for people earning more than US$1 million.
Although Obama has said he would only agree to rises on people earning more than US$250,000, analysts say the development shows the outline of a tentative deal is being formed.
Wall Street ended on a high, with the Dow closing up 0.76 per cent, the S&P 500 gaining 1.19 per cent and the Nasdaq adding 1.32 per cent.
Japanese shares continued to be supported by the falling yen, which helps the country’s exporters, as dealers bet on fresh central bank moves to boost the economy.
The election of Abe and his Liberal Democratic Party on Sunday was widely expected and investors now expect the Band of Japan to unveil a further loosening of monetary policy at the end of its two-day meeting on Thursday.
In early Tokyo trade, the dollar bought 83.86 yen, compared with 83.88 yen in New York late Monday. The dollar has risen about 5 per cent against the yen since Abe made his vow to press for more BoJ measures last month.
The euro edged up to US$1.3171 and 110.60 yen, compared with US$1.3161 and 110.40 yen.
Oil prices rose, with New York’s main contract, light sweet crude for delivery in January rising 35 cents to US$87.57 a barrel and Brent North Sea crude for February delivery advancing 51 cents to US$108.15.
Gold was at US$1,698.40 at 0200 GMT compared with US$1,690.10 late Monday.