Asian stocks rise, Nikkei at 33-year high on debt ceiling optimism

Most Asian equities rallied on Monday as markets hailed a tentative agreement reached by US legislators to raise the debt ceiling and avoid a default, with Japan’s Nikkei resuming its near-33-year highs on better risk appetite.

The Nikkei 225 led Asian markets, rising 1.4% to its highest level since July 1990. Gains were led mostly by heavyweight chipmaking and banking firms, as technology equities continued to gain from hopes that demand for artificial intelligence will increase this year.

Nvidia Corporation supplier Advantest Corp jumped 5.2% to a record high, and was the top performer on the Nikkei. The broader TOPIX added 1%.

Other Asian equities rose after senior Democratic and Republican senators said they had achieved a tentative agreement to lift the US spending ceiling, only a week before a deadline for a US default. The accord is now likely to be voted on in Congress this week, however several politicians have expressed dissatisfaction with it.

Nonetheless, the accord helped to end weeks of tense discussions that had scared risk-averse markets with the potential of a US default. A default would be disastrous for the world economy, causing a recession in the United States and crashing debt markets.

Australia’s ASX 200 index rose 1.1%, while the Taiwan Weighted index added 0.9%, with the latter also taking support from gains in heavyweight chipmakers.

Philippine shares led gains across risk-heavy Southeast Asian markets, while Singapore-traded futures for India’s Nifty 50 index pointed to a positive open.

Still, bigger gains were held back by concerns over rising U.S. interest rates, especially after a hotter-than-expected inflation reading on Friday.