South Korean dancers in traditional costumes beat their drums during opening ceremony of the Year 2013 trading outside the Seoul Stock Exchange Tuesday, Jan. 2, 2013. The benchmark Korea Composite Stock Price Index (KOSPI) started up 16.69 points, or 0.84 percent, at 2, 013.74. (AP Photo/Ahn Young-joon)
South Korean dancers in traditional costumes beat their drums during opening ceremony of the Year 2013 trading outside the Seoul Stock Exchange Tuesday, Jan. 2, 2013. The benchmark Korea Composite Stock Price Index (KOSPI) started up 16.69 points, or 0.84 percent, at 2, 013.74. (AP Photo/Ahn Young-joon)
Staff members of the Korea Stock Exchange Market salute to the national flag during the opening ceremony to commence the Year 2013 trading at the Seoul Stock Exchange Tuesday, Jan. 2, 2013. The benchmark Korea Composite Stock Price Index (KOSPI) started up 16.69 points, or 0.84 percent, at 2, 013.74.(AP Photo/Ahn Young-joon)
BANGKOK (AP) ? Stock markets in Asia registered relief Wednesday over the U.S. congressional vote to stop hundreds of billions of dollars in automatic tax increases and spending cuts that risked plunging the world's biggest economy into recession.
Benchmarks in Australia and Hong Kong boomeranged on the first trading day of the year, just before Congress passed an emergency measure to avert much of the impact of the tax-and-spending changes so steep they were dubbed the "fiscal cliff." Asian markets had slipped on Monday, fearing that negotiations might collapse.
Economists warned that without such a vote, the tax increases and spending cuts that technically took effect at the start of the year could cause a recession. Some experts had predicted financial markets would plunge unless a clear-cut deal was reached.
Instead, markets in Asia blessed the stopgap measure approved by Congress late Tuesday in Washington to retroactively counter some of the "fiscal cliff" effects. The bill awaits the signature of President Barack Obama.
Hong Kong's Hang Seng index rallied 1.9 percent to 23,089.94. Australia's S&P/ASX 200 surged 1.3 percent to 4,707.90. South Korea's Kospi jumped 1.5 percent to 2,027.00.
Some analysts said that expectations for a compromise were so low that any deal was viewed as positive.
"Among business leaders, I'm gonna say this deal isn't enough to move the needle on confidence. It may improve consumer confidence a little, investors obviously are celebrating a tentative deal but you know how transitory investor confidence can become," said Jack Ablin, chief investment officer at BMO Group.
Benchmarks in Singapore, Taiwan, India, the Philippines, Thailand and Indonesia also rose. Markets in Japan are still on holiday and reopen Friday.
Uncertainty about the outcome of negotiations drove down regional stocks Monday, the last trading day of 2012.
Australia's S&P/ASX 200 fell 0.5 percent to close at 4,648.90, as investors sold off stocks to lock in profits. Hong Kong's Hang Seng closed marginally lower. Singapore, New Zealand and India also declined. Japan and South Korea were closed.
The measure Congress approved calls for higher taxes on incomes over $400,000 for individuals and $450,000 for couples, a victory for Obama. Taxes also would rise on estates greater than $5 million in size and on capital gains and dividend income made by the wealthy.
At the same time, it would stop $24 billion in spending cuts set to take effect over the next two months, although only about half of that total would be offset with spending reductions elsewhere in the budget.
Even if Washington bypasses the fiscal cliff, the next crisis is just around the corner, in late February or early March, when the government reaches a $16.4 trillion ceiling on the amount of money it can borrow.
"Call it breathing room, call it kicking the can down the road, call it whatever you like ... when the decision on the legal US debt limit will be needed, the fight starts afresh," said analysts at DBS Bank Ltd. in Singapore.
Republicans say they won't go along with raising the limit on government borrowing unless the increase is matched by spending cuts to help attack long-term debt. Failing to raise the debt ceiling could lead to a first-ever U.S. default that would roil the financial markets and shake worldwide confidence in the United States.
"Republicans vow not to raise the limit without sharp cuts in spending and Obama vows not to cut spending without further tax hikes. Two more months of shenanigans ... It certainly looks that way," DBS said in a market commentary.
U.S. stocks shot higher Monday on the belief that lawmakers would work out a deal. The Dow Jones industrial average rose 1.3 percent to 13,104.14. The Standard & Poor's 500 rose 1.7 percent to 1,426.19. The Nasdaq composite index rose 2 percent to 3,019.51.
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