Asian shares down as US edges toward shutdown

AFP, HONG KONG

Tue, Oct 01, 2013 - Page 15

Asian markets slumped yesterday as the US government edged toward a shutdown over a budget battle.

The face-off in Washington also sent the dollar lower, while the euro suffered selling pressure from a crisis in Italy that has left the country’s five-month-old government on the brink of collapse.

Taipei fell 0.69 percent, or 56.81 points, to 8,173.87 and Wellington eased 0.97 percent, or 46.29 points, to 4,736.39.

Tokyo fell 2.06 percent, or 304.27 points, to 14,455.80, Sydney shed 1.66 percent, or 88.2 points, to end at 5,218.9 and Seoul eased 0.74 percent, or 14.84 points, to 1,996.96. Hong Kong finished down 1.5 percent at 22,859.9 points.

However, Shanghai rose 0.68 percent, or 14.64 points, to close at 2,174.67 after a survey by British banking giant HSBC showed Chinese manufacturing expanded further last month.

Traders have been spooked by the latest row on Capitol Hill, with the US government on the brink of shutting down after the US House of Representatives approved a Republican bill seeking to delay US President Barack Obama’s healthcare law.

Lawmakers now have less than 48 hours to reach an agreement to keep the government open, but analysts say the chances of a breakthrough are slim.

Obama has threatened to veto any bill that undercuts his sweeping health overhaul, while US Democratic Senate Majority Leader Harry Reid says his chamber will reject the bill.

Adding to the crisis is a deadline to raise the country’s borrowing limit, which comes up in the middle of this month.

With Republicans determined not to raise the debt ceiling unless Obama gives way on the health bill, there are fears that Washington will run out of cash and default on its repayments.

“Things are far from the ‘panic stage,’ but they don’t have to be for investors to be spooked by the apparent intractability of the US political deadlock,” Tachibana Securities analyst Kenichi Hirano said.

The impasse weighed on the dollar yesterday, with the unit weakening to ¥97.80 from ¥98.24 in New York on Friday.

The euro fell to US$1.3485 and ¥131.83 compared with US$1.3519 and ¥132.88.

The single currency suffered selling pressure after Italian Prime Minister Enrico Letta called a vote of confidence in his government, as former Italian prime minister Silvio Berlusconi pulled his party’s ministers out of the coalition.

Italian President Giorgio Napolitano will have to mediate to find a way out of the latest political impasse, and has said he would dissolve parliament, triggering new elections, only “if there are no other solutions.”