US debt deal sparks share rally on markets
- 17 October 2013
- From the section Business
Share markets have risen as the US government agreed a deal to end the partial government shutdown and avoid a debt default.
The Dow Jones Industrial Average, Nasdaq, and S&P 500 all closed up by more than 1% on Wednesday as the deal edged nearer.
Confirmation of the deal boosted shares in Asia, with Japan's Nikkei up 0.8%.
The deal will fund the government until 15 January, and extends the debt ceiling until 7 February.
The US Senate voted in favour of the deal, which was then passed by 285-144 in the House of Representatives, whose Republican leadership begrudgingly agreed to support the measure.
It came hours before the deadline to raise the $16.7tn (£10.5tn) limit.
As well as providing the government with funding, the bill will create a panel of Senate and House members to draw up a longer-term budget agreement.
The Dow Jones rose 206 points to close at 15,374. The S&P 500 was up 23 points to 1,721 and the Nasdaq rose 45 points to 3,839.
While Japan's Nikkei index rose, gains were more muted elsewhere in Asia, and in Hong Kong the Hang Seng was little-changed.
Stock markets, accustomed to Washington wrangling after several years of budget brinkmanship, did not react as dramatically during the shutdown as they had during previous budget disputes.
"The market believed in and anticipated a resolution," says Doug Cote, chief market strategist at ING Investment Management.
"However, we are nonetheless pleased that we got it. It's a relief."
Traders on the floor of the New York Stock Exchange were upbeat throughout the day and said they were eager to get back to normal trading.
Benedict Willis, managing director of Alfred Fried & Company, told the BBC that he thought markets would continue to rise as a global recovery can now continue.
He says this upward trend was "interrupted over the last month because of the clowns we have in Congress."
"Now, we can go back to focusing on what stock markets are good for which is company earnings."
But many worry that this deal only prolongs the agony, and that there will be yet another fight in January.
"Hopefully in three months [US politicians] will realize the impact they've had on the good name and reputation of America," says Mr Willis.
But he adds: "I would expect some more drama to continue."