Morning update courtesy of Spreadex

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Asian shares have traded higher overnight with the region on track for its biggest monthly gain since January 2012. Led by Japanese equities, the Topix Index reversed losses amid speculation the nation’s government will study a corporate tax cut and advise public pension funds to hold more risky assets. Japan’s Topix has climbed 9.5 percent this month, extending this year’s surge to 41 percent. The gains have come amid optimism Prime Minister Shinzo Abe and the Bank of Japan can lead the country out of deflation through unprecedented monetary easing. Keeping a lid on further gains is the uncertainty in the U.S. market with a political showdown over government spending on the horizon.

Republican leaders in the House notified members that a vote on raising the debt limit could come as early as Friday. Obama has warned Congress that the treasury was quickly running out of funds to pay government bills and could soon face a damaging debt default. Treasury Secretary Jack Lew pleaded with Congress to raise the $16.7 trillion debt limit and said the government would not be able to borrow funds past October 17.

The U.S government will be aware of the potential for federal agency shutdowns in the near future unless Congress comes up with emergency funds. Possibly beginning next Tuesday – the new fiscal year – the Republican-led House of Representatives is set for tough fights over the next few days. Both the debt ceiling and government funding measures have been complicated by Republican attempts to use the must-do bills to gut President Barack Obama’s signature healthcare law, known as “Obamacare.” At a private meeting with House Democrats on Wednesday night, Senate Majority Leader Harry Reid reassured lawmakers they would not allow Republicans to include provisions to delay or defund Obamacare in the spending bill.

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