Asian markets turned higher on Thursday as Donald Trump’s deal to raise the US debt ceiling gave investors some much-needed good news after the North Korea-fuelled sell-off this week.
While tensions over Pyongyang’s weekend nuclear test remain high, Trump’s insistence to Chinese counterpart Xi Jinping that military action was not his “first choice” and a call for a diplomatic solution provided some solace for now.
Trump agreed a deal with his Democrat rivals to ease the US borrowing limit until December 15 in order to avert a crippling shutdown of the government and also provide funding to help the recovery from Hurricane Harvey in Texas and Louisiana.
“We essentially came to a deal, and I think the deal will be very good,” he said after meeting leaders of both parties in the Oval Office.
During the talks Republicans had called for a long-term deal before Trump shocked the room by jumping in to back Democrats’ short-term fix.
The news provided a lift to Asian investors and raised hopes again for the president’s market-friendly economic agenda, including tax reform and infrastructure spending.
“Republican back-room squabbling aside I think we all have to agree with Senate Democrat Minority Lead Schumer that this was ‘a positive step forward’,” said OANDA head of Asia Pacific trading Stephen Innes.