US President Barack Obama said the deal will cut about $US1 trillion in spending over 10 years and avoid the nation's first ever default, which would have had a devastating effect on the US economy and global markets.
At the close, the benchmark S&P/ASX200 index was up 73.2 points, or 1.65 per cent, at 4497.8, while the broader All Ordinaries index rose 72.6 points, or 1.61 per cent, to 4573.1. Tokyo shares jumped 1.84 per cent.
On the ASX 24, the September share price index futures contract was 89 points higher at 4466 points, with 41,624 contracts traded. The Australian dollar edged higher to $US1.1050, up from $US1.0952 late Friday.
IG Markets dealer Chris Weston said the US deal had sparked some optimism on domestic markets and throughout Asia on Monday.
“We're certainly getting some relief there,” he said. “Asian markets are very buoyant today and the futures are predicting a pretty good relief rally in the US overnight.”
But Mr Weston said there were still big questions for investors.
The US deal still needs to be approved by Congress and includes the establishment of a bipartisan committee of Congress to report back by November, with a proposal to further reduce the US deficit.
“The big question mark is do we get that downgrade to US debt?” Mr Weston said. “While it's a good situation that we've avoided default, people are reluctant to take sizeable bets, so we're probably seeing a bit of short covering on the back of that.”
Mr Weston said a positive vote in the US Senate could lead to a rally in the US during the offshore session, despite ongoing concerns about US growth and the sustainability of the EU.
Locally, resources companies and banks were the main beneficiaries of the positive investor sentiment.
courtesy of Business Weekly
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