• Tue
  • Sep 23, 2014
  • Updated: 12:29am
BusinessMoneyStock Talk

Asian shares mixed after US government shutdown

Hong Kong and Shanghai were closed for the National Day public holiday

PUBLISHED : Tuesday, 01 October, 2013, 1:55pm
UPDATED : Tuesday, 01 October, 2013, 5:24pm

Asian markets were mixed on Tuesday after political gridlock in Washington triggered the first US government shutdown in 17 years, while upbeat regional economic data provided some cheer.

The dollar edged down against the yen, with investors saying the Capitol Hill stand-off made it less likely the Federal Reserve would start winding down its stimulus programme soon.

Tokyo gained 0.20 per cent, or 28.92 points, to 14,484.72 and Seoul added 0.10 per cent, or 1.91 points, to 1,998.87 but Sydney fell 0.23 per cent, or 12.1 points, to 5,206.8.

Hong Kong and Shanghai were closed for a public holiday.

A prolonged shutdown could have a major impact on confidence and on the US economy
Tracey Warren, CMC Markets Stockbroking :

The US government shut down at midnight Washington time as Republicans and Democrats refused to give ground to reach a budget deal.

World markets had expected the deadline to pass with no breakthrough and shares had fallen in previous sessions.

Europe’s main stock markets were also mixed at the start of trade. London’s FTSE 100 dipped 0.06 per cent, the CAC 40 in Paris was up 0.16 per cent and Frankfurt’s DAX 30 rose 0.28 per cent.

The US closure will see about 800,000 federal staff told to stay at home, leading to the closure of numerous agencies in the first shutdown since 1996. President Barack Obama warned it would hit a nascent recovery in the world’s biggest economy.

Obama accused Republicans of holding America to ransom with their “extreme” political demands for his flagship healthcare law to be delayed for a year before they give the go-ahead to any budget.

Tracey Warren of CMC Markets Stockbroking told Dow Jones Newswires: “A prolonged shutdown could have a major impact on confidence and on the US economy, and will likely see a delay in the release of (US) employment figures.”

Adding to the sense of crisis, the two sides appear unlikely to reach a deal to lift the US borrowing limit by mid-October, when the government runs out of cash. This would leave it unable to service its debts and in turn possibly default.

However, Song Seng Wun, a regional economist with Malaysian bank CIMB, said: “Asian markets are trying to see beyond what is an obvious case of politics coming in the way of common sense.”

He said markets expect that the shutdown “would likely be temporary”.

Share

Related topics

For unlimited access to:

SCMP.com SCMP Tablet Edition SCMP Mobile Edition 10-year news archive
 
 

 

 
 
 
 
 

Login

SCMP.com Account

or