Global investors are breathing sighs of relief after US politicians reached a deal to avert a default. Stock markets have jumped, but some are cashing in their profits, wary that the catastrophe has only been postponed.
The US budget and debt agreement reached by congressional leaders on Wednesday cheered investors across the global, sending the stock market significantly higher.
The global stocks rally started on Wall Street where the Dow Jones Industrial Average already soared on the news that a deal was imminent, ending 206 points, or 1.36 percent higher. US bond investors celebrated, too, as the yield on the one-month US Treasury bill, which would have matured at the time of a possible default, fell significantly.
In Asia on Thursday, Japan shares made hefty gains with the Nikkei index closing 0.83 percent higher. In Hong Kong, the stocks rally added an average of 0.23 percent to the value of equities.
European shares, however, retreated again on Thursday as investors were taking profits from the previous day's highs which were prompted by news of the US debt deal.
Germany's DAX stock market index came down from a new all-time high of 8861 points posted on Wednesday, slumping slightly by 0.33 percent to 8817 points in early trading Thursday.
The eurozone's blue-chip Euro STOXX 50 index also fell 0.3 percent, after rising to its highest since May 2011on Wednesday.
Apparently, investors remain wary of developments in the United States as the last-minute budget and debt deal ensures government funding only until January 15 and raises the debt ceiling until February 7. Coupled with the threat of a less accommodative monetary policy by the US Federal Reserve (US Fed), the mixture has the potential to unsettle markets again early next year.
uhe/kms (AP, AFP, dpa, Reuters)