1:35 PM New York – U.S. investors paused after the best 4-day gain in a year. European markets gained and Asian markets surged. China reported a sharp increase in exports and imports in January and the best monthly surplus since 2009. The U.S. House approved debt ceiling without any conditions.
U.S. indexes reversed earlier gains of as much as 0.2% to a loss after investors paused following the best 4-day gain in a year following reassuring comments from the newly appointed Fed Chairman Janet Yellen.
However, global markets extended gains for the second day in a row.
S&P 500 index gained 0.08 to 1,819.90 and Nasdaq Composite Index added 11.05 to 4,202.05.
Market indexes in Asia soared after investors reacted to solid gains in the U.S. and Europe in overnight trading.
Hang Seng index led the Asia-wide rally with a rise of 1.5% followed by a similar surge in Thailand and a gain of 1% in Australia. Indexes in India gained 0.4% and in Indonesia added 0.6%.
Indexes in South Korea and Kuala Lumpur advanced fractionally.
U.S. Debt Ceiling Passes in the House
The U.S. House approved the federal government’s borrowing authority without any conditions attached after Republican Party leaders dropped all policy demands to avoid a confrontation in an election year.
The debt ceiling was suspended until February 7 after a bipartisan deal in October that terminated a 16-day government shutdown.
If the measure had failed to pass the house, the next time lawmakers could vote on the bill would be on February 25 and too close to the deadline set by the Treasury Secretary when extraordinary maneuvers to sustain government finances would run out.
Lawmakers in a 221-to-201 vote approved the first in increase in debt ceiling without any conditions attached since 2009. Two Democrats voted no and 28 Republicans voted yes.
The measure lifts U.S. Treasury’s borrowing authority until March 2015, postponing any further showdowns in the Senate and the House until after mid-term elections in November.
The vote also ended the 3-year era brought by active blocking of Federal government functioning by the Tea Party faction of the Republican Party as voters turn away from their confrontation politics that favors spending in military and trims welfare and domestic infrastructure spending.
Surprise Rise in China’s Exports Raises Doubts
China reported a sharp jump in exports in January, surprising many analysts who were looking for a near flat growth in January.
Customs Administration in China reported exports in January increased 10.6% from a year ago, surpassing the highest estimate of 2% increase.
Imports also gained 10% from a year ago, as the second largest economy in the world imported record amount of iron ore, crude oil and copper.
Trade surplus in the month increased to $31.9 billion from $25.6 billion in December.
Analysts were surprised with the surge in exports and many were expecting a slowdown ahead of Chinese Lunar New Year.