Asian stocks rise amid US optimism

Asian stock markets rose today, registering optimism after negotiations late last week between President Barack Obama and leaders of Congress raised hopes the US would avoid its “fiscal cliff” before the end-of-the-year deadline.

Mr Obama met with the top leaders of the House and Senate on Friday to discuss ways to avert a series of automatic tax increases and spending cuts scheduled to take effect January 1 in the absence of intervening action.

US politicians have said a budget deal before Christmas is possible.

Economists have been warning of the consequences if no action is taken. The spending cuts and higher taxes – plus the expiration of extended unemployment benefits – would mean that 671 billion US dollars is sliced out of the American economy next year. That is enough to throw the world’s biggest economy into a recession.

Asian benchmarks were also driven up by investors looking for good deals following a global stock market slump that occurred in the aftermath of the US presidential election.

Hong Kong’s Hang Seng added 0.4% to 21,247.47 and South Korea’s Kospi rose 1% to 1,878.48. Australia’s S&P/ASX 200 gained 0.2% to 4,345.60.

“Because Hong Kong dropped for two weeks, maybe there is some bargain hunting,” said Linus Yip, strategist at First Shanghai Securities in Hong Kong. He said that the budget negotiations in the US are occupying the spotlight in the near term, but the ultimate issue is the state of the global economy.

Investors were particularly concerned by data last week showing US industrial output falling 0.4% in October and the 17-country euro area falling into another recession.

The yen’s recent weakness helped boost Japan’s Nikkei 225 and its heavy orientation toward exporting companies. The index in Tokyo jumped 1.6% to 9,171.26, a two-month high.