Stocks edged higher in Asia and futures markets pushed European stocks higher on Thursday after the US House of Representatives voted to raise the debt ceiling, sending the bill to the Senate where it should be adopted.
Hong Kong’s benchmark Hang Seng stock index and Japan’s Topix both rose 0.8%, and the CSI 300 index of stocks listed in Shanghai and Shenzhen rose 0.7%.
The gains in Asia-Pacific trade came after the House voted 314-117 on Wednesday in favor of a bill to raise the US debt ceiling. The vote was seen as the biggest hurdle for the legislation, which still needs to pass the Senate before it can be signed into law before the June 5 deadline.
Futures markets are tipping the Euro Stoxx 50 to climb 0.7% at the open, while the FTSE 100 is expected to rise 0.3%. The S&P 500 is expected to open flat later today.
“We still have to go through the Senate, but I’m more inclined to think it’s an automatic buffer at this point,” said Stephen Innes, managing partner at SPI Asset Management.
“The market here is very well positioned for this move. Stocks would be a few percentage points lower if investors suspected there was any hint that it wouldn’t happen.
Equities in Asia were also supported by an unexpected rebound in a key indicator of Chinese factory activity.
The Caixin/S&P Global Manufacturing Purchasing Managers’ Index rose to 50.9 in May, unlike the official manufacturing PMI released earlier this week, which fell to 48.8. A reading above 50 indicates expansion from the previous month, while a reading below 50 signifies contraction.
The Caixin gauge tracks small and medium-sized manufacturers, while the official PMI tracks the activity of large public companies.
“The average of the two has increased and is consistent with the easing of downward pressure on factory activity over the past month,” said Julian Evans-Pritchard, chief China economist at Capital Economics.
He said the surge in manufacturing and recent gains in China’s service sector suggest second-quarter growth “may not be as bad as many fear.”
In currencies, the Chinese renminbi rose 0.2% against the dollar after the PMI reading, to 7.096 Rmb.