Asian markets down as US budget woes drag on

Published: 04th October 2013 10:55 AM  |   Last Updated: 04th October 2013 10:55 AM   |  A+A-

Uncertainty about how long the partial shutdown of the U.S. government will last kept Asian stock markets on edge Friday.

Some 800,000 federal workers and scores of agencies were idled earlier this week after a sharply divided U.S. Congress failed to agree on short-term funding for the government to pay its bills beyond Monday, when the fiscal year ended.

Markets initially took the passing of the deadline and the partial shutdown of nonessential government services in stride. But investor anxiety has risen as the budget impasse between Republicans in the House of Representatives and the White House drags on.

Republicans are insisting that President Barack Obama accept changes to the health care law he pushed through three years ago as part of a budget bill. Obama refuses to consider any deal linking the health care law to routine legislation needed to extend government funding.

Although House speaker John Boehner "affirmed that he is committed to avoid this situation, we don't see much breakthrough coming," said Cynthia Kalasopatan at Mizuho Bank Ltd. in Singapore.

Investors also had to digest some disappointing economic news from the world's biggest economy.

The Institute of Supply Management said that sales fell sharply, new orders dipped and hiring weakened at U.S. service companies. The report covers industries including retail, construction, health care and financial services.

Japan's Nikkei 225 index fell 0.3 percent to 14,117.72. Hong Kong's Hang Seng lost 0.5 percent to 23,094.34. South Korea's Kospi fell marginally to 1,998.97. Australia's S&P/ASX 200 shed 0.4 percent to 5,215.

American lawmakers also have to agree on an increase in the debt ceiling by Oct. 17 or the world's largest economy may default on its debt payments. Congress must periodically raise the limit on government borrowing, but the once-routine matter has become the subject of bitter fights between Republicans and Democrats.

As well as undermining confidence in the ability of the U.S. to pay back what it owes, a U.S. default could send shockwaves round the world economy, threatening the patchy recovery. While some analysts said it was unlikely that U.S. politicians would allow the budget impasse to deteriorate that far, the negative rhetoric out of Washington was undermining investors' moods.

"That's the sort of thing that keeps investors out of the market. And when people aren't buying, it's easy for stocks to sell, to fall," said Chris Weston, chief market strategist at IG in Melbourne, Australia.

Among individual stocks, Air New Zealand rose 0.3 percent after announcing plans to raise its stake in Virgin Australia Holdings to 25.9 percent after getting the green light from Australian authorities. Virgin Australia rose 1.2 percent.

On Thursday, the Dow Jones industrial average fell 0.9 percent to close at 14,996.48. The Standard & Poor's 500 dropped 0.9 percent to 1,678.66. The Nasdaq composite declined 1.1 percent to 3,774.34.

Benchmark oil for November delivery was down 12 cents to $103.19 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 79 cents to close at $103.31 a barrel on the Nymex on Thursday.

In currencies, the euro fell to $1.3624 from $1.3626 late Thursday. The dollar rose to 97.16 yen from 97.12 yen.


Disclaimer : We respect your thoughts and views! But we need to be judicious while moderating your comments. All the comments will be moderated by the editorial. Abstain from posting comments that are obscene, defamatory or inflammatory, and do not indulge in personal attacks. Try to avoid outside hyperlinks inside the comment. Help us delete comments that do not follow these guidelines.

The views expressed in comments published on are those of the comment writers alone. They do not represent the views or opinions of or its staff, nor do they represent the views or opinions of The New Indian Express Group, or any entity of, or affiliated with, The New Indian Express Group. reserves the right to take any or all comments down at any time.

flipboard facebook twitter whatsapp