By Carla Mozee, MarketWatch
LOS ANGELES (MarketWatch) -- Asian stocks advanced Tuesday,
finding support from gains overnight on Wall Street as U.S.
lawmakers appeared to make progress toward raising the U.S. debt
limit as that deadline approaches.
Investors in Tokyo and Hong Kong, returning from three-day
weekends for both markets, considered remarks by Senate Majority
Leader Harry Reid, who said on the Senate floor that he was "very
optimistic" about concluding a deal "this week" to raise the debt
limit as well as end the government shutdown. Sen. Mitch McConnell,
the Republican minority leader, said he shared Reid's feeling that
"we'll get a result that's acceptable to both sides."
Keying off Wall Street's turn higher on anticipation of deals in
Washington, Hong Kong's Hang Seng Index rose 0.6%, and the Nikkei
Stock Average gained 0.4% in Tokyo.
The S&P/ASX 200 in Australia closed 1% higher, while South
Korea's Kospi sat 0.8% higher in late trade.
The Shanghai Composite , however, lagged with a 0.1% loss
following Monday's rise of 0.4%.
Markets worldwide have been watching Washington as it nears an
estimated Oct. 17 deadline for Congress to allow the Treasury to
borrow in order to pay the government's bills. Without legislative
action, the U.S. could default on its debt obligations at a time
when the global economy is still recovering from the financial
crisis.
Overnight on Wall Street, the Dow Jones Industrial Average (DJI)
swung from a 101-point deficit to close higher by 64 points, or
0.4%, and the S&P 500 Index (SPX) also rose 0.4%.
"As we have alluded recently, hopes of a deal in Washington
continue to buoy equity prices. Simultaneously, the shutdown has
created an economic data vacuum which allows any weakness to be
explained away by the shutdown," JonesTrading chief market
strategist Mike O'Rourke said in a note to clients late Monday.
"Despite the slow start to the [corporate earnings] season, the
Beltway betting on a fiscal fix continues to dominate equity
trading," he wrote.
In Sydney, mining shares were mostly higher Tuesday, following
overnight gains for gold and copper prices, with BHP Billiton Ltd.
(BHP) finishing 1% higher.
Also, Rio Tinto Ltd. (RIO) jumped 2.5%, extending gains after it
said iron-ore output rose to a new quarterly record. The figures
arrived as the company considers an expansion of its mines in
Australia. Shares of iron-ore miner Fortescue Metals Group Ltd.
(FSUMY) also stretched gains, rising 5.8% following Rio Tinto's
report.
Asian financial blue chips also logged gains ahead of a possible
resolution to fully reopen the U.S. government, which has been in a
partial shutdown since Oct. 1. Westpac Banking Corp. rose 0.9%,
while Japan's Mizuho Financial Group Inc. (MFG) was up 0.5%.
Chinese banking stocks moved higher following central-bank data
showing financial institutions issued 787 billion yuan ($128.8
billion) in new loans in September, more than the 674.5 billion
yuan in loans expected in a Wall Street Journal survey of
analysts.
Hong Kong-traded shares of Agricultural Bank of China Ltd.
picked up 1.4%, and those of China Construction Bank Corp. rose
0.7%.
The overall money and credit data for September reflected
"stable and robust credit growth," and showed "capital flowed into
China again in [the third quarter] despite capital flight in many
other emerging economies on fear of an incoming U.S.
quantitative-easing tapering," said Bank of America Merrill Lynch
economists Xiaojia Zhi and Ting Lu in report Monday. Read about
China's possible intervention in the yuan in The Tell.
The data may spur more analyst calls for tightening measures by
China, said Zhi and Lu, adding that they "definitely don't expect
credit tightening and further rise of rates in the near term.
Monthly new loans will most likely fall due mainly to seasonality,
but the government's more prudent policy stance could also help
limit the scale of new loans."
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