U.S. House Votes to Lift Debt Ceiling Temporarily, Markets Extend Gains

Bikram Pandey
23 Jan, 2013
New York City

Financial markets extended multi-year highs after lawmakers in the House passed the temporary debt ceiling. The move will keep the government functioning and provide time till mid-May to work on longer term solutions. Tech stocks gained after earnings.

[R]4:00 PM, New York – Financial markets extended multi-year highs after lawmakers in the House passed the temporary debt ceiling. The move will keep the government functioning and provide time till mid-May to work on longer term solutions. Tech stocks gained after earnings.[/R]

Financial markets focused on the latest batch of earnings in New York and in Europe as lawmakers worked on a temporary solution to avert the self-imposed debt ceiling.

The U.S. House voted to temporarily suspend the debt ceiling that lifts the limits $16.4 trillion borrowing limit until May 19. The House voted 285-144 in favor of the ceiling revision. Senate Majority Leader Harry Reid said the measure will be passed quickly and unrevised and will send it to President Barack Obama.

Tech stocks in New York traded higher after Google, IBM and AMD reported better than expected results. Apple is scheduled to release earnings after the close.

In corporate news, Abbott fourth quarter net declined 35% and General Dynamics net swung to $603 million profit. Google profit jumped 7% and IBM net climbed 6%. McDonald’s fourth quarter net rose 1% and WellPoint quarterly net jumped 57%.

European markets closed mixed after the latest batch of earnings from Unilever and Novartis. Resource stocks were higher after BHP Billiton reported higher production in the latest quarter. Banks were under pressure on profit taking after 10% surge in the year.

In Mumbai trading, the benchmark Sensex index gained 0.3%. The largest wireless telecom operator Bharti Airtel plans to increase telecom tariffs on certain plans. Exide Industries agreed to acquire 50% stake in ING Vysya Life Insurance. Kirloskar Brothers net swung to loss. Zee Entertainment third quarter profit after tax surged 40.5%.

Nikkei index declined for the third day in a row as investors shifted attention to corporate earnings and the yen firmed. Bank of Japan set a 2% target and pledged to purchase assets from 2014. TDK dropped 4% on the earnings worries.

Australian stocks closed at a new 20-month high after latest inflation data was below estimate and BHP Billiton reported higher sales and held its target for iron ore production growth of 3% in 2013. Linc Energy soared after it revised its energy estimate at shale operation in South Australia.

Commodities, Bonds and Currencies

U.S. treasury yield on 10-year bond closed down to 1.82% and on 30-year bond edged down to 3.02%.

The U.S. dollar inched lower to $1.331 to a euro and increased against the Japanese yen to 88.61 yen.

Immediate delivery futures of Texas crude oil decreased $1.34 to $96.24 a barrel and Brent crude gained 47 cents to $110.61, futures of natural gas decreased 1 cent to $3.55 per mbtu and gasoline traded up 0.45 to 283.44 cents a gallon.

In metals trading, gold decreased $8.60 to $1,684.30 per ounce and silver gained 9 cents to $32.26 and copper closed down 2.20 cents to $3.68 a pound.