Asia Stocks Rise as U.S. House Passes Debt Limit Bill

Asian stocks traded broadly higher on Thursday after the House passed a bill to raise the U.S. debt ceiling last night and investors digested the possibility of a pause in rate hikes from the Federal Reserve this month.

As of 9:42 a.m. Bangkok time, the Japanese Nikkei 225 has recovered 0.23% after falling below the 31,000 barrier on Wednesday.

The S&P/ASX 200 in Australia was up 0.24%, while the Kospi in South Korea was down 0.39%.

After briefly entering bear market territory, the Hang Seng index in Hong Kong has now recovered, with the HSI showing a 0.37% gain. Mainland China’s Shanghai Composite Index increased by 0.10%.

On Wednesday night, the U.S. House of Representatives passed the bill with support from both Democrats and Republicans, a dramatic conclusion to weeks of tense negotiations between the White House and Republican House Speaker Kevin McCarthy.  

The bill was approved by a vote of 314 to 117 in the Republican-controlled House and now moves to the Democratic-controlled Senate0

U.S. stocks fell across the board on the final trading day of May, with the Dow Jones Industrial Average down 0.41% and the S&P 500 down 0.61$ as investors watched Washington’s struggle over raising the federal debt ceiling. The Nasdaq Composite fell the most, or 0.63%.

Following comments by Fed Governor Philip Jefferson that the central bank is likely to hold interest rates steady in June to examine the economic outlook, investors also considered the prospect of a pause in rate hikes. Philadelphia Fed President Patrick Harker agreed, saying, “I think we can take a bit of a skip for a meeting.”