Asian equities poised for cautious open as debt-accord passes

Asian equities were poised for a cautious open Tuesday as White House and Republican congressional leaders increased lobbying to ensure Congress passes a debt-accord to head off a US default.

Futures for Japan and Australia were pointing to the slimmest of moves when those two markets opened, while contracts for Hong Kong suggest more declines. A key measure of Chinese shares is within a whisker of a bear market as a wobbly economic recovery, intensifying geopolitical tensions and a weaker yuan kept investors away.

Contracts on the S&P 500 and the Nasdaq 100 climbed 0.3% and 0.5% yesterday, as they opened in Asia after each making small gains Monday in holiday-thinched trading. The markets in the US were closed for Memorial Day. Europe's stocks wavered on Monday in muted holiday-affected trading.

The dollar, which has benefited from angst around the statutory borrowing limit, was little changed early Tuesday. The Treasury futures linked to the 10 - 30 year part of the U.S. government bond market rallyed Monday on light volume.

A rebound for Chinese equity benchmarks would require a monetary catalyst or improving ties between Beijing and Washington, in addition to rosier macro data, said Hebe Chen, a market analyst for IG. It's probably safe to say this reopening has lost its steam, she said.

Environmentalists, defense hawks and conservative hardliners have condemned Bush's promises of a deal with President Joe Biden and Republican House Speaker Kevin McCarthy. The debt ceiling is a steep ceiling of debts. The Democrat has been calling on lawmakers to support the bill, which is due to be voted on by the House on Wednesday.

What are the main moves in markets?

None of the offshore yuan was little changed at 7.0857 per dollar.

This story was produced with the assistance of Bloomberg Automation.

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