Asian shares rise on relief over U.S. debt ceiling deal, euro eyes ECB

Asian shares bounced back on Thursday after U.S. President Donald Trump and congressional leaders unexpectedly agreed to raise the government debt limit until December, eliminating the near-term risk of a government shutdown. 

The euro maintained this week’s slim gains ahead of the European Central Bank’s policy meeting later in the day while oil prices were supported as U.S. Gulf Coast refineries restart in the wake of Hurricane Harvey. 

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS gained 0.5 percent while Japan's Nikkei .N225 rose 0.4 percent. 

In New York on Wednesday the S&P 500 .SPX gained 7.69 points, or 0.31 percent, led by gains in energy sector on the back of a rise in oil prices. 

Trump forged a surprising deal with Democrats in Congress to raise the U.S. debt limit and provide government funding until Dec. 15, embracing his political adversaries and blindsiding fellow Republicans in a rare bipartisan accord. 

“The deadline on the debt ceiling has been extended just by three months so it will come back to haunt markets again later this year. Still, markets liked it as we don’t have to worry about it for now,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management. 

The news also helped to lift U.S. Treasuries yields, with the 10-year yield rising back to 2.101 percent US10YT=RR from its 10-month low of 2.054 percent touched earlier on Wednesday.

U.S economic data was fairly upbeat, with gauge of services sector activity by the Institute for Supply Management (ISM) [USNPMI=ECI] accelerating in August. 

Still, geopolitical tensions over North Korea’s nuclear and missile programme continued to cast a shadow, particularly in Japan and South Korea.The rally in shares lacked momentum because Trump’s deal raises the debt ceiling for only three months.