(Photo: REUTERS / Michael Caronna)
A man walks past a board displaying stock indexes around the world in Tokyo May 7, 2009. Asian shares extended their rally on Thursday as encouraging signs about the health of U.S. banks and the global economy bolstered riskier assets such as oil and hurt safe-havens such as the yen.
Asian stock markets surged Wednesday, the first trading session of the year, as sentiment was buoyed after the U.S. House of Representatives passed a deal to avert the fiscal cliff.
Hong Kong's Hang Seng climbed 2.20 percent or 498.42 points to 23,155.34 and India’s BSE Sensex advanced 0.85 percent or 166.02 points to 19,746 while South Korea’s KOSPI Composite surged 1.68 percent or 33.60 points to 2,030.65. Markets in Japan and China are closed for a public holiday.
The U.S. House of Representatives voted in favor of the Senate-approved tax bill, late Tuesday that will see a hike in income tax rates on only the wealthiest adults. The Republican-dominated House approved the bill with 257 to 167. A failure to agree a deal would have triggered $600 billion spending cuts and tax hikes that threaten to push the world’s largest economy into recession.
The deal will allow tax hikes for individuals earning more than $400,000 and couples making more than $450,000, which will see tax rates rise to 39.5 percent from the current 35 percent rate. Unemployment insurance is extended for two years, while sharp spending cuts amounting to about one-third of the cliff have been postponed for two months.
"If the fog caused by the fiscal cliff disappears, there will probably be moves toward putting risk back on," Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore, told Reuters.
Sentiment was also buoyant after the official data released Tuesday showed that manufacturing activity in China expanded for the third straight month in a row in December. The data released by the China Federation of Logistics & Purchasing showed that the Purchasing Managers' Index (PMI) remained unchanged at 50.6 in December from that in the previous month.
Hong Kong stocks rallied to a 19-month high, led by gains from financial and property developers shares. China Life Insurance Co Ltd, climbed 5.73 percent and China Resources Land Ltd, surged 4.98 percent while CNOOC Ltd, gained 2.26 percent.
Seoul shares surged Wednesday as a last-minute deal averted the U.S. fiscal cliff crisis and South Korea’s manufacturing activity expanded in December to end six months of contraction. The HSBC Purchasing Managers’ Index (PMI) rose to 50.1 in December from 48.2 in November.
Among the stocks, Samsung Electronics Co Ltd, surged 3.55 percent and LG Display Co Ltd, advanced 1.45 percent while Hyundai Motor Co fell 1.14 percent.
This article is copyrighted by International Business Times, the business news leader