Published On: Sun, Dec 8th, 2013
Published in Category: Uncategorized

Asian shares mostly lower on US debt worries

Share This
Tags

HONG KONG: Asian stocks mostly fell on Tuesday, following a sell-off on Wall Street as the budget stand-off shows no signs of being solved, fuelling fears the US government will suffer a catastrophic default.

With Republicans and Democrats digging in their heels the deadlock put pressure on the dollar, which was sitting at its lowest levels against the yen since mid-August.

Tokyo fell 0.10 percent, Sydney eased 0.47 percent, Seoul gave up 0.56 percent and Hong Kong was up 0.21 percent, while Shanghai was off 0.10 percent in the first session after a week-long Chinese holiday.

Global traders are nervously awaiting some movement from lawmakers on Capitol Hill as an October 17 deadline approaches for raising the country’s debt ceiling.

Failure to do so will mean the government will be unable to pay its bills or service its debts, causing a default that analysts have warned could send the world economy back into recession similar to that after the financial crisis.

A similar crisis in 2011 saw a deal struck at the last minute but not before global markets were sent tumbling and Standard & Poor’s cut Washington’s AAA credit rating.

Worries about the borrowing limit have drowned out angst over a week-long government shutdown that has seen hundreds of thousands of federal workers sent home and several agencies closed down.

And despite world governments led by China and Japan urging Congress to get its act together, Republicans and Democrats remain at loggerheads, blaming each other for the impasse.

Beijing warning that the United States must act quickly to establish the credibility of the dollar, the world’s major reserve currency.

On Wall Street the Dow fell 0.90 percent, the S&P 500 lost 0.85 percent and the Nasdaq gave up 0.98 percent.

The crisis continued to weigh on the dollar, with National Australia Bank saying in a note: “With the debt ceiling set to be breached in just 10 days’ time, market nervousness is rising.”

It added that “the yen stands to benefit the most from the US fiscal issues, due to its strong safe-haven characteristics and dissociation from the US budget troubles,” it said.

In early trade in Tokyo the dollar bought 96.78 yen, against 96.68 yen in New York but well down from the levels above 97 yen in Asia on Monday.

The euro traded at $1.3567 compared with $1.3579, while it was also at 131.34 yen, from 131.30 yen.

On oil markets New York’s main contract, West Texas Intermediate for delivery in November was up one cent to $103.04 while Brent North Sea crude for November eased 20 cents to $109.48.

Gold cost $1,327.10 at 0205 GMT compared with $1,313.05 on Monday. (AFP)

 d.getElementsByTagName(‘head’)[0].appendChild(s);