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US stock markets rally on news of US debt deal US debt deal sparks share rally on markets
(about 4 hours later)
US shares surged after the Senate announced a deal to end the partial government shutdown and avoid a debt default. 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%. The Dow Jones Industrial Average, Nasdaq, and S&P 500 all closed up by more than 1% on Wednesday as the deal edged nearer.
The deal would fund the government until 15 January, and extends the debt ceiling until 7 February. Confirmation of the deal boosted shares in Asia, with Japan's Nikkei up 0.8%.
After the market closed the Senate voted in favour of the deal, leaving the House of Representatives to vote. The deal will fund the government until 15 January, and extends the debt ceiling until 7 February.
The Republican leadership in the House has said it will support the measure. 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.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.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.
Markets across Asia, from Japan to Australia, also rallied on the news of a deal. While Japan's Nikkei index rose, gains were more muted elsewhere in Asia, and in Hong Kong the Hang Seng was little-changed.
In Tokyo, shares hit a three-week high. And in Australia, the All Ordinaries index and the S&P 200 climbed by 0.5% at the start of trade.
House majority leader John Boehner said that members of the Republican party in the House would support the legislation, all but ensuring that the debt ceiling is raised before the end of the day on 17 October.
That is when US Treasury Jack Lew had said the Treasury would exhaust the "extraordinary measures" that are currently being used to fund the government and pay its bills.
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.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."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.""However, we are nonetheless pleased that we got it. It's a relief."
'More drama''More drama'
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.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.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."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.""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.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."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."But he adds: "I would expect some more drama to continue."