SHANGHAI: Hong Kong stocks are set to end a gloomy week with the best day in three months, joining an Asian rally fuelled by the US Senate passing legislation that would avert a debt default, and increasing hope the Federal Reserve might pause raising interest rates. China stocks also climb.

The Hang Seng Index closed up 4.1%, the biggest one-day gain since March 1. The gauge had touched six-month lows this week on China growth concerns and geopolitical tension.

China’s blue-chip CSI300 Index rose 1.4%, while the Shanghai Composite Index rose 0.8%.

For the week, CSI300 Index rose 0.3%, while the Hang Seng Index climbed 1.1%.

Asian stocks surged on Friday after the US Senate passed bipartisan legislation that lifts the government’s $31.4 trillion debt ceiling. The measure now awaits President Joe Biden’s signature to become law.

Appetite for risky assets was also fuelled by bets the Federal Reserve might stand still on interest rates in its next meeting.

Nuno Fernandes, equity portfolio manager at for GW&K’s Emerging Wealth Equity Strategy, said he remained optimistic on China’s recovery, despite recent market volatility.

“Chinese consumers are spending on wellness, on life experiences, on travel, on dining-out ... so we’re encouraged with the results. We are holding ground with our position,” said Fernandes, whose holdings including Tencent Holdings Alibaba Group, Trip.com and Baidu.

Tech shares listed in Hong Kong jumped 5.3%.

Property shares listed in China and Hong Kong surged on stimulus policies introduced by several Chinese cities and expectations have built up that others will follow suit in coming days, UBS analysts wrote in a note.

In China, northbound trading flow reached nearly 4-month high, at 8.5 billion yuan($1.23 billion).