WELLINGTON (Reuters) - Six Pacific countries are at a high risk of debt distress in part due to government spending to respond to the COVID-19 crisis, the World Bank said in a report on Thursday.

The report, titled Raising Pasifika, said fiscal consolidation was needed in Kiribati, Republic of the Marshall Islands, Federated States of Micronesia, Samoa, Tonga and Tuvalu because these countries lack domestic debt markets and access to international capital markets.

Among other countries in the region, Vanuatu is rated at medium risk, while Palau and Nauru’s debt is sustainable, the report noted.

"While public debt levels as a share of GDP remain modest across most of the region, the PIC9’s economic geography and volatile revenue bases mean debt distress risks remain elevated," it said.

Debt has surged in the region since 2019 as the tourism-dependent economies were hit by COVID border closures, trade was hurt by logistical challenges and weather events caused damage. The World Bank last month said that Fiji must also take urgent action to reduce its debt burden.

Stephen Ndegwa, World Bank Country Director for Papua New Guinea & the Pacific Islands, said reducing debt, strengthening revenue and improving the quality of government spending are critical areas for Pacific countries to address.

The report said continued access to grants in line with pre-pandemic trends is also essential to find capital investment projects for sustainable development and climate resilience.

The World Bank report recommends that, together with more efficient spending, improvements to tax collection must be a priority for Pacific governments to ensure individuals and businesses are contributing their fair share to the region’s economies.

It also said that Pacific countries should allocate more to social assistance and protection measures.

“These investments would help reduce poverty and inequality, while also supporting communities in tough times, including in the aftermath of climate-related disasters or major economic shocks, such as the region saw from the COVID-19 pandemic and the recent natural disasters in Tonga and Vanuatu,” it said.

Investing.com -- U.S. President Joe Biden trims an overseas trip this week as lawmakers come out of a key meeting with guarded hopes for debt ceiling deal. Meanwhile, retail chain Target prepares to unveil its latest results, and fresh data is expected to provide new insight into the state of the U.S. housing market.

1. Debt ceiling deal "possible"

President Biden and House Speaker Kevin McCarthy carried a cautiously positive message out of their latest crunch meeting over raising the debt ceiling.

Following the talks on Tuesday, which included other top Congressional leaders, Biden said that the lawmakers were on "a path" towards reaching an agreement to increase the more than $31 trillion federal borrowing limit. The White House later added that Biden will shorten a planned trip overseas this week to participate in further negotiations in person.

For his part, McCarthy noted that "it is possible to get a deal by the end of the week."

However, the deadline to avoid an unprecedented default continues to edge closer, with the U.S. widely expected to run out of money to pay debtholders early next month. Such an occurrence, officials have warned, could prove to be catastrophic for the U.S. and have knock-on effects for the global economy.

2. Futures hold steady amid debt limit optimism

U.S. stock futures inched higher on Wednesday as investors gauged the guarded optimism from lawmakers in Washington over the debt limit negotiations.

At 04:57 ET (08:57 GMT), the Dow futures contract was up 94 points or 0.28%, S&P 500 futures traded 11 points or 0.27% higher, and Nasdaq 100 futures edged up 20 points or 0.15%.

Wall Street stocks dropped in the prior session, with the outlook for the negotiations still mired in uncertainty. The meeting between Biden, McCarthy, and Congressional leaders ended after U.S. markets closed on Tuesday.

The blue-chip Dow Jones Industrial Average and broad-based S&P 500 both slipped. The Nasdaq Composite also dipped, although strength in technology stocks helped mitigate these losses.

Government bond yields for both 2-year and 10-year notes moved higher, while bills maturing next month (when a U.S. default is projected to happen) saw their yields retreat from their highest mark since before the 2008 financial crisis. Prices fall as yields rise.

3. Target on deck

Target (NYSE:TGT) will become the latest U.S. retail chain to report its latest earnings this week, with investors keen to see how much price-conscious consumers are snapping up the company's food products.

Groceries have previously made up just over a fifth of Minnesota-based Target's total sales as shoppers chose to buy other items like bed sheets and beauty products. But with inflation at elevated levels, customers are widely expected to have relegated their spending to essential goods like food.

Target will report how well this demand for groceries held up when it releases its latest earnings before the start of U.S. trading on Wednesday.

Elsewhere, DIY group Home Depot (NYSE:HD) slashed its guidance on Tuesday after unfavorable weather contributed to weaker-than-expected sales. Shares in the firm fell.

On Thursday, low-cost retail giant Walmart (NYSE:WMT) will step into the limelight when it posts fresh results.

4. U.S. housing data ahead

On the economic data front, investors will have a chance on Wednesday to examine the health of the U.S. real estate market with the release of the housing starts and building permits figures for April.

Single-family housing starts, which typically accounts for a large portion of new homebuilding, jumped in March, while permits for these projects also surged to a five-month high.

Economists have suggested that a recent cooling in mortgage rates could be providing a boost to demand from homebuyers. These rates have fallen from their peaks reached last October and November as expectations grow that the Federal Reserve will pump the brakes on its long-standing monetary policy tightening campaign as soon as next month.

However, housing activity still looks to be some way off from a total revival. A decline in multi-family homebuilding dragged overall housing starts down by 0.8% to 1.420 million units in March, while total building permits also dropped.

5. U.S. crude stockpiles move higher

Oil prices hovered around the flatline on Wednesday after an unexpected rise in U.S. crude stockpiles exacerbated concerns over demand in the world's largest consumer.

U.S. crude inventories increased by around 3.6 million barrels in the week ended May 12, according to data from the industry body American Petroleum Institute, instead of an anticipated drawdown.

However, these losses have been limited as releases from the Strategic Petroleum Reserve have to be factored into the inventory build, while the drop in gasoline and distillates inventories pointed to improving demand ahead of the summer season.

At 05:11 ET, U.S. crude futures traded 0.04% lower at $70.83 per barrel, while the Brent contract inched up 0.04% to $74.94 a barrel.