Thursday saw the sky rocketing of the Asian shares over Wall Street market giants with the anticipation of extension of the US debt ceiling to December 15.
This comes after two democrats commented that President Trump, who seemed to have aligned himself with the Democrats, would fully support a debt ceiling extension and government funding plan. If congress passes the bill, which also includes financial relief for Hurricane Harvey, It would prevent a default on the federal debt.
The US debt ceiling is a legislative limit on the amount of national debt that the Treasury can issue therefore restricting the amount that can be borrowed by the Federal government. The debt limit does not directly limit government deficits but only limits the treasury from paying expenditures and other expenses after limit has been reached.
Japan’s Nikkei 225 rose 0.11%, while South Korea’s Kospi gained a solid 1.07%. In Australia, the S&P/ASX 200 rose 0.12%. Australia reported that its trade balance surplus for July narrowed sharply to$460 billion, compared with a surplus of $875 million seen.
In Greater China, Hing Kong’s Hang Seng index rose 0.11% and the Shanghai Composite eased 0.11%.The Dow Jones Industrial average closed higher at 21,807. The S&P 500 closed 0.31% higher while the Nasdaq Composite closed at 6393.31, up 0.28%.
Thursday saw markets in constant anticipation awaiting the decision by the European Central Bank’s interest rates. However, President Mario Draghi’s previous remarks downplayed the expectations and reported that near announcements could only come in October.
“We have an extension, which will go out to December 15th[…] will include Harvey, the amount of money to be determined,” President Trump told reporters aboard Air Force One.
That was well received by the market following the recent stalemate between the US and North Korea after the US asked the UN Security Council to freeze Kim Jong-un’s assets and impose oil sanctions to North Korea following Kim’s recent Hydrogen bomb test.
The index from The Institute for Supply Management registered 55.3 in August. This is an improvement from July’s declining index at 53.9. An index reading above 50 shows a positive exploitation of service industry while an index below 50 indicates an unexploited service industry.
Oil has so far been seen as the let down in the market. This is because the US might still be experiencing a substantial disruption in energy infrastructure due to post- Hurricane Harvey. This has caused a tick in
crude oil prices since not all refineries have resumed operations.
Houston area was the worst hit by Harvey and is the central energy hub in the U.S. It has a substantial oil and refined products storage capacity and its close proximity to the Strategic Petroleum Reserve.
The U.S might experience a major draw on gasoline inventories for a significant part of the near future. The severity of the draws and the price fluctuations will depend on how fast the oil and gas industry will bounce back from the impacts of the storm.