If you were keeping an eye on your financial screens, you would have seen the S&P/ASX 200 Index (ASX: XJO) begin to rocket higher right at 10:58am AEST amid the latest developments surrounding the US debt ceiling.
Over the next 30 minutes the ASX 200, which was in the red at the time, surged 0.7% to post a 0.6% intraday gain.
Here's what's happening with the US debt ceiling.
ASX 200 leaps higher on US debt ceiling resolution
As you're likely aware, the United States Federal government bumped up against its self-imposed US$31.4 trillion debt ceiling in May.
Without more borrowing capacity the government was set to run out of fund by 5 June.
Concerns over a potential default or even a lengthy delay in resolving the US debt ceiling have been pressuring international markets and ASX 200 shares for several weeks now.
But ASX investors breathed a sigh of relief late this morning when the House of Representatives passed a bill to suspend the US debt ceiling until 1 January 2025. Democrats won over enough Republican votes by agreeing to cap federal government spending through to 2025.
The bill passed 314 to 117, supported by 165 Democratic and 149 Republican congressmen.
While the bill still needs to pass through the Senate, Senate approval is all but assured. Then US President Joe Biden will waste no time signing it into law.
That will make the 79th time that the US debt ceiling has been raised since 1960. The last increase of US$2.5 trillion was passed in December 2021.
A confirmed resolution of the US debt ceiling could see the ASX 200 enjoy another boost.
Commenting on the House approval, Biden said (courtesy of The Guardian):
Tonight, the House took a critical step forward to prevent a first-ever default and protect our country's hard-earned and historic economic recovery.
I urge the Senate to pass it as quickly as possible so that I can sign it into law, and our country can continue building the strongest economy in the world.
Indeed, The Guardian reports that Senate Majority Leader Chuck Schumer was just spotted back in Washington DC and heading for his office.
