Bourses around the world have been steadily declining during the past fortnight as the impasse between US President Barack Obama and his Democrats and Opposition Republicans intensified, with next Thursday's imminent deadline spooking investors.
The US carries $US16.7 trillion ($NZ20.1 trillion), its maximum debt limit, and requires a law change by Thursday to extend that limit or potentially face defaulting on debt repayments. Some of several hundred thousand US Government employees put on unpaid leave have been ordered back to work this week.
Craigs Investment Partners broker Chris Timms noted the volatility of the major bourses had not flowed entirely through the New Zealand exchange, which was buffered by the dividend payout period at present, with investors holding on to shares.
The New Zealand exchange rose yesterday.
''The Republicans have been hardline against Obama's healthcare [policy], but have offered the first olive branch, with no strings attached, at this stage,'' Mr Timms said.
He said the possible six-week ''breathing space'' would allow the Republicans and Democrats time to finalise and approve the country's budget, and also reset the debt ceiling limit.
However, he cautioned that while the Republicans appeared to have softened their stance, the weeks ahead would reveal what conditions they sought, in return for backing Obama's agenda.
Forsyth Barr broker Andrew Rooney said US benchmark indices had rallied the most since January, in anticipation US lawmakers could reach agreement to increase the debt ceiling and avoid default.
China is the largest foreign holder of US Government debt and Premier Li Keqiang reiterated his country's concern about the debt ceiling problem when he spoke with US Secretary of State John Kerry at an Asian summit in Brunei on Thursday, according to China's official Xinhua news agency.
The state-run China Daily newspaper in Beijing blasted ''the astonishing failure'' of the US Congress.
''It is pitiful that the US is now putting the fragile world recovery under renewed threat with its mind-boggling political infighting,'' it said.
Bourses at a glance
UNITED STATES
• Dow Jones +2.02%
• Nasdaq Composite+1.99%
• Standard & Poor's 500+1.97%
• Canada TSX +1.54%
EUROPE
• UK FTSE 100+1.46%
• Germany Dax 30 +1.99%
• France Cac 40 +2.21%
ASIA PACIFIC
• Singapore Straits Times+0.48%
• South Korea Kospi -0.7%
• China Shanghai Composite -0.94%
• Japan Nikkei +1.12%
• Hong Kong Hang Seng-0.36%
• New Zealand SE 50 +0.14%
• Australia All Ords -0.10%
• S&P 200 -0.11%
- Additional reporting AFP.
