Asian markets down as US budget woes drag on

Asian stock markets down as US budget woes drag on and debt ceiling deadline approaches

Associated Press
Washington budget impasse keeps markets in check
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A woman stands in front of an electronic stock board of a securities firm in Tokyo, Friday, Oct. 4, 2013. Uncertainty about how long the partial shutdown of the U.S. government will last kept Asian stock markets on edge Friday. (AP Photo/Koji Sasahara)

BANGKOK (AP) -- Uncertainty about how long the partial shutdown of the U.S. government will last kept global 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.

In early European trading, Britain's FTSE 100 fell less than 0.1 percent to 6,443.81. Germany's DAX fell marginally to 8,592.92. France's CAC-40 gained 0.2 percent to 4,137.75.

Wall Street was headed for a higher open, with Dow Jones industrial futures rising 0.2 percent to 14,933. S&P 500 futures gained 0.3 percent to 1,674.10.

Asian stocks were mostly lower. Japan's Nikkei 225 index fell 0.9 percent to 14,024.31. Hong Kong's Hang Seng lost 0.3 percent to 23,138.54. South Korea's Kospi fell 0.1 percent to 1,996.98. Australia's S&P/ASX 200 shed 0.5 percent to 5,208.

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.

Benchmark oil for November delivery was up 25 cents to $103.56 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 $1.3611 from $1.3626 late Thursday. The dollar rose to 97.18 yen from 97.12 yen.

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