Asian shares rise as receding debt fears spur Wall St rally

TOKYO (AP) — Asian shares rose Thursday, tracking a rally on Wall Street after signs of progress on resolving the standoff in Congress over the debt ceiling.

Japan's benchmark Nikkei 225 gained 0.5% to finish at 27,678.21. Australia's S&P/ASX 200 added 0.7% to 7,256.70. South Korea's Kospi jumped 1.8% to 2,959.46. Hong Kong's Hang Seng surged 2.9% to 24,659.84. Trading was closed in Shanghai for a Chinese national holiday.

Stephen Schwartz, a senior director at Fitch, said he believes the regional economy will start to recover with the growing vaccination efforts in Asia, which mean restrictions to curb the spread of the coronavirus will get lifted.

But southern and southeastern Asia, where vaccination rollouts have lagged, remain vulnerable to COVID-19 “pandemic-related setbacks." Recent problems in China's property sector are another risk, he added.

“Slower growth in China, together with the tapering we expect by the U.S. Fed, could have broader negative repercussions, especially for the region’s emerging and frontier markets,” he said.

Japan's economic prospects also remain murky as new Prime Minister Fumio Kishida gives his first policy speech later this week. Although he has promised to boost incomes, he has not outlined specifics and is not widely perceived as a proponent of the regulatory and structural changes analysts have long said Japan sorely needs. Some skeptics worry that any new spending will merely push the country into deeper debt.

Kishida has also spooked investors by voicing support for a capital gains tax.

In the U.S., investors are hoping Congress may manage to temporarily extend the federal government's debt ceiling and buy lawmakers time to reach a more permanent resolution. The market recovered from a morning loss shortly after Senate...