Global financial markets welcomed the deal in Washington to avoid a debt
default by the government of the world’s largest economy.
U.S. and Asian stock markets moved higher and most European markets
posted gains Monday after U.S. President Barack Obama and congressional
leaders made a deal to increase the legal limit on borrowing and cut
government spending.
The price of gold dropped more than $15 to sell at $1,612 an ounce. Gold
is traditionally a refuge for investors worried about the economy, so
the price drop may be linked to easing of economic tensions.
The
price of oil rose nearly 3 percent, the largest gain in two months, as
investors bet the agreement will help economic growth, which will boost
energy demand and prices.
Adrian Foster, head of financial markets research at Hong Kong’s
Rabobank, said there has been a clear relief rally on the news from the
U.S., and he sees a rally likely to go through the end of this year.
Stephen Schwartz, chief economist for Banco Bilbao Vizcaya in Hong Kong,
said a lot of events still can move the market, but he thinks the tone
is now set for a rebound.
Despite the proposed deal, there is still a chance that rating agencies
will eventually downgrade U.S. bonds because of the uncertainly of
future spending cuts and the general anxiety among investors caused by
the debt crisis.
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