US debt deal boosts NZ sharemarket

The increased investor confidence boosted the S&P/NZX 50 Index which climbed steadily all day and closed at 11,935.65, up 105.62 points or 0.89% and almost wiping out the loss on Friday. There were 101 gainers and just 33 decliners over the whole market, though trading was light with 75.5 million shares worth $75.22m changing hands.

Over the weekend, the White House and House Republicans agreed that the US$31 trillion (NZ$51t) debt ceiling will be raised for two years and there will be a cap on spending.

Greg Smith, head of retail with Devon Funds Management, said the agreement still has to pass through the hoops of Congress and Senate but the timing has come earlier than past impasses and that’s a relief for investors.

“Both sides made concessions and it removes the possibility that the US will default on its debt obligations, though there will be a knock-on impact on borrowing costs,” Smith said. The Dow Jones Industrial Average was up 1% to 33,093.34 points; the S&P 500 gained 1.3% to 4205.45; and the Nasdaq Composite rose 2.19% to 12,975.69 and has now increased 24% for the year.