Hong Kong stocks rose amid optimism U.S. lawmakers will reach a deal to raise the debt limit and on speculation Janet Yellen won’t rush to withdraw stimulus if she becomes the next head of the Federal Reserve.
The Hang Seng Index gained 0.2 percent to 23,074.90 as of 9:31 a.m. in Hong Kong. The Hang Seng China Enterprises Index, also known as the H-share index, was little changed at 10,505.86. President Barack Obama opened the door to talks to end the impasse over the U.S. debt ceiling, with House Republicans sending negotiators to the White House today.
“Anything could happen so markets are pretty cautious,” Sean Fenton, a Sydney-based fund manager who helps oversee about $1 billion at Tribeca Investment Partners, said in a Bloomberg Television interview. “The uncertainty on Capitol Hill combined with Yellen likely pushes back the case for Fed quantitative easing tapering to early next year.”
The Hang Seng Index (HSI) gained 1.7 percent this year through yesterday on better-than-expected China economic data and after the Federal Reserve refrained from cutting stimulus. Hong Kong’s benchmark equity gauge traded at 11 times estimated earnings yesterday, compared with 14.9 for the Standard & Poor’s 500 Index.
Futures on the S&P 500 added 0.3 percent. The U.S. equity gauge gained 0.1 percent yesterday after congressional aides said Republican and Democratic leaders are open to a short-term increase in the debt limit, the first movement toward averting a U.S. default. Should lawmakers not agree to raise the cap by Oct. 17, the country’s borrowing authority will lapse.
Shares also climbed yesterday after Yellen, the Fed vice chairman and an architect of its stimulus program, was nominated to replace central bank chief Ben S. Bernanke. A partial government shutdown that began Oct. 1 has delayed the release of economic data, making it harder for Fed policy makers to decide when to start paring unprecedented monetary stimulus.
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