Business

Asian shares slip as US lawmakers dig in over shutdown

October 07, 2013

Asian stocks fell today on growing nervousness at the lack of movement to end the US government shutdown, as a deadline approaches for lawmakers to raise the country's borrowing limit.

The dollar slipped further against the yen and euro as the budget stand-off on Capitol Hill approaches a seventh day with no end in sight.

Tokyo lost 1.22%, or 170.99 points, to end at 13,853.32, Sydney fell 0.9%, or 46.9 points, to 5,161.1 and Seoul shed 0.13%, or 2.56 points, to 1,994.42.

In the afternoon Hong Kong was 0.48% lower. Shanghai was closed for a public holiday.

"Markets remain unimpressed with the lack of progress in breaking the US deadlock," Kenichi Hirano, market adviser at Tachibana Securities, told Dow Jones Newswires.

US Treasury Secretary Jack Lew warned yesterday that Congress was "playing with fire" as Republican House leader John Boehner said the party would not raise the US debt ceiling without spending cuts.

Global markets are on tenterhooks, with concerns that if the borrowing limit is not raised by October 17 – when the country runs out of cash – Washington will not be able to pay its bills and will in turn default.

While investors expect some sort of deal to be hammered out by the cut-off date, anxiety is building that no headway has been made so far in the crisis, which has forced President Barack Obama to pull out of the Asia-Pacific Economic Cooperation summit in Indonesia.

A similar stand-off in 2011 went down to the wire before the debt ceiling was raised, but not before world stock markets tumbled and Standard & Poor's downgraded Washington's AAA sovereign rating.

"Both sides have become more entrenched in their positions, implying that any agreement on raising the debt ceiling required by October 17 also looks out of reach," French bank Credit Agricole said in a note to investors.

The uncertainty over the US economy put downward pressure on the dollar. In early trade the greenback bought 97.06 yen, compared with 97.47 yen in New York Friday. The euro fetched $1.3573 and 131.77 yen against $1.3557 and 132.14 yen.

However, US investors on Wall Street remain upbeat that Democrats and Republicans will eventually reach an agreement.

In Friday the Dow ended 0.51% higher, the S&P 500 added 0.71% and the Nasdaq was up 0.89%.

On oil markets New York's main contract, West Texas Intermediate for delivery in November, fell 49 cents to US$103.35 in afternoon trade. Brent North Sea crude for November eased 35 cents to US$109.11. – AFP, October 7, 2013.

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