Asia stocks mixed as US budget deadlock drags on

Asian stocks mixed as Obama and Congress fail to reach agreement to end partial shutdown

Associated Press

BANGKOK (AP) -- Asian stock markets were mixed Thursday as a partial shutdown of the U.S. government dragged on and the risk of a possible default on its debt increased.

Many investors remained on the sidelines ahead of testimony by U.S. Treasury Secretary Jack Lew before lawmakers in Washington on Thursday.

Officials said he was expected to reiterate that Congress needed to raise the government's borrowing limit, the so-called debt ceiling, to prevent a potentially disastrous default.

Japan's Nikkei rose 1 percent to 14,179.87. South Korea's Kospi fell nearly 0.1 percent to 2,001.10. Australia's S&P/ASX 200 shed 0.1 percent to 5,143.10 after the release of worse-than-expected unemployment data. Benchmarks in Singapore, Indonesia and Thailand rose while mainland China fell.

President Barack Obama and Republican congressional leaders have failed to reach an agreement on raising the limit that the government can borrow.

"I think investors are facing what has become an all too familiar but nevertheless difficult task of correctly pricing in the risk of the U.S. reaching its debt ceiling," said Ric Spooner, chief of CMC Markets in Sydney. "Opinions are divided about whether the market has fallen far enough to reflect the proper risk."

The Treasury has warned it will run out of money if Congress does not agree to raise a $16.7 trillion cap on borrowing by Oct. 17 and allow it to sell more bonds. That has raised the specter that the U.S. won't be able to pay interest on its debt.

The Treasury says a default on bond payments could freeze global credit, push up borrowing costs and trigger an economic collapse worse than the Great Recession that followed the 2008 financial crisis.

Republicans say they won't allow more borrowing unless Democrats agree to restructure benefits programs or cut the deficit; the White House has ruled out negotiations tied to the debt cap.

Congress also hasn't taken any discernible steps to end the partial shutdown of the federal government.

The government was forced to furlough workers and halt some services after Congress, bitterly divided over Obama's health care law, refused to approve a short-term funding measure to allow the nation to pay its bills as it entered a new fiscal year this month.

Wall Street rose slightly on Wednesday. The Dow Jones industrial average rose 0.2 percent to close at 14,803. The Standard & Poor's 500 rose 0.1 percent at 1,656. The Nasdaq composite fell 0.5 percent, to 3,677.

Benchmark crude for November delivery was up 16 cents to $101.77 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.88 to close at $101.61 a barrel on the Nymex on Wednesday.

In currencies, the euro fell to $1.3492 from $1.3517 late Wednesday in New York. The dollar rose to 97.81 yen from 97.54 yen.

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