ASIA MARKETS: Asian Stocks Rise On Signs Of U.S. Budget Progress

By Daniel Inman

Asian stocks rose Friday, with Australia and Japan among the best performers, as signs of progress in U.S. debt talks provided relief to markets.

Hopes of a budget deal in Washington led stocks on Wall Street Thursday to enjoy their biggest one-day gain since January, with this positive sentiment extending into Asia.

The rally came after House Republicans said that they will offer a six-week extension to the nation's borrowing limit in exchange for negotiations on spending.

Australia's S&P/ASX 200 jumped 1.6% to 5230.90, Hong Kong's Hang Seng Index rose 1.2% to 23218.32 and Japan's Nikkei rose 1.5% to 14404.74.

The yen (USDJPY) softened Friday, as the dollar added to its overnight 0.8% rise against its Japanese counterpart. The greenback last traded at Yen98.33, compared with Yen98.16 late Thursday in New York.

Gains in Asia didn't quite match the sharp moves on Wall Street, where the Dow Jones Industrial Average (DJI) shot 2.2% higher on Thursday.

"Asia didn't come down as much," said Shane Oliver, head of investment strategy and chief economist at AMP Capital in Sydney. "It is also clear that the negotiations might go on for a while and a solution might not be found soon."

Southeast Asia lagged behind slightly, with Indonesia's JSX up 0.9% late in Asia and Singapore's Strait Times index rising just 0.6%. In China, the Shanghai Composite added 1.7% to 2228.15.

The political impasse in the U.S. has been a constant theme for global markets throughout the week, though Asia has been resilient to the declines and more receptive to good news. Japan and Southeast Asian markets were able to end the week with respectable gains, with the Nikkei up 2.7% since last Friday and Indonesia 3.2% higher as of late Friday.

On Tuesday, regional stocks shook off early weakness after Shanghai came back online with a healthy gain after a weeklong public holiday. There was a similar story on Wednesday, as markets reacted well to news of the nomination of Janet Yellen to succeed Federal Reserve Chairman Ben Bernanke.

The negotiations in Washington remain incomplete, while Japan and Hong Kong were both heading into a long weekend with public holidays on Monday. This means that investors in Tokyo and Hong Kong will have to wait until Tuesday to react to any weekend developments.

Hong Kong will also be waiting until Tuesday to respond to a batch of Chinese economic data, with trade and inflation numbers coming out over the weekend and on Monday. Investors will be looking for evidence that strong data to come out of China in recent months has carried on to September.

In corporate news, the retail sector was in focus in Japan, as Fast Retailing Co. dropped 3.2% after the company behind the Uniqlo chain of stores released a disappointing outlook for the current business year. Department store operator Takashimaya Company added 4.1% in Tokyo after reporting solid earnings for the first half of the current fiscal year.

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