Asian shares gain after US House vote to raise debt limit

Shares in Asia and futures markets rose on Thursday after the US House of Representatives voted to raise the debt ceiling and European stocks edged higher.

Hong Kong’s benchmark Hang Seng stock index and Japan’s Topix both added 0.8 percent, and the CSI 300 index of Shanghai- and Shenzhen-listed shares added 0.7 percent each.

The gains in Asia-Pacific trade came after the House voted 314-117 on Wednesday in favor of a bill to raise the US debt ceiling. The vote was seen as the biggest hurdle for the legislation, which still must pass the Senate before it can be signed into law ahead of the June 5 deadline.

In the futures market, the Euro Stoxx 50 climbed 0.7 percent at the open, while the FTSE 100 is expected to rise 0.3 percent. The S&P 500 is set to open flat later in the day.

“We still have to go through the Senate, but I think at this point it’s a rubber stamp,” said Stephen Innes, managing partner at SPI Asset Management.

“The market here is in favor of going through this phase. If investors suspect that this will not happen then the stock will move percentage points lower.

Stocks in Asia were also hit by an unexpected rebound in a key gauge of Chinese factory activity.

The Caixin/S&P Global Manufacturing Purchasing Managers’ Index rose to 50.9 in May, while the official manufacturing PMI released earlier this week fell to 48.8. A reading above 50 indicates expansion compared to the previous month, while a reading below 50 indicates contraction.

The Caixin gauge tracks small and medium-sized manufacturers, while the official PMI follows activity in large, state-run companies.

“Both averages lifted and are consistent with easing pressures from a decline in factory activity last month,” said Julian Evans-Pritchard, chief China economist at Capital Economics.

He said a pick-up in manufacturing and recent gains in China’s services sector suggest second-quarter growth “may not be as bad as feared”.

In currencies, China’s renminbi was at Rmb7.096, up 0.2 percent against the dollar following the PMI reading.