Stock markets in Asia opened higher this morning following a last minute deal, passed by the US House of Representatives, to halt tax hikes and spending cuts worth about $600bn.
A failure to reach a deal could have pushed the US over the so-called fiscal cliff, as temporary tax cuts implemented by the previous Bush government were set to expire, removing billions of dollars from the economy, and possibly triggering a recession in the world’s largest economy.
Shares in Hong Kong gained 2.9% as markets opened in Asia and South Korea’s Kospi index was up by 1.7%, while shares in Singapore rose by 1.3%. Markets in Japan and mainland China are closed.
Investors reacted positively to news of the US compromise, since many Asian economies are heavily invested in exports to the US.
“With the final hurdle being passed now, we’ve got a minimum deal that avoids any immediate threat of the US falling off the cliff,” Jason Hughes, head of premium client management for IG Markets Singapore, told the BBC.
“That’s definitely boosted Asian equities markets,” he added.