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HONG KONG – Asian markets slumped on Monday, September 30, as the US government edged towards a shutdown over a budget battle.
Read: US shutdown likely as House Republicans amend budget bill
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 5-month-old government on the brink of collapse.
Tokyo fell 2.06%, or 304.27 points, to 14,455.80, Sydney shed 1.66%, or 88.2 points, to end at 5,218.9 and Seoul eased 0.74%, or 14.84 points, to 1,996.96. In the afternoon Hong Kong was down 1.28%.
But Shanghai rose 0.68%, or 14.64 points, to close at 2,174.67 after a survey by banking giant HSBC showed Chinese manufacturing expanded further in September.
Traders have been spooked by the latest row on Capitol Hill, with the US government on the brink of shutting down after the House of Representatives approved a Republican bill seeking to delay President Barack Obama’s health care law.
Read: US House OKs budget bill delaying Obamacare; government shutdown likely
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 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 mid-October. 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,” said Tachibana Securities market analyst Kenichi Hirano.
The impasse weighed on the dollar Monday, with the unit weakening to 97.80 yen from 98.24 yen in New York Friday, September 27.
The euro fell to $1.3485 and 131.83 yen compared with $1.3519 and 132.88 yen.
The single currency suffered selling pressure after Italian Prime Minister Enrico Letta called a vote of confidence in his left-right government, as former premier Silvio Berlusconi pulled his party’s ministers out of the coalition.
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”.
On oil markets New York’s main contract, West Texas Intermediate for delivery in November, fell $1.35 to $101.52 in afternoon trade. Brent North Sea crude for November was down 95 cents to $107.68.
Gold cost $1,339.17 at 0700 GMT compared with $1,324.60 on Friday.
In other markets:
Taipei fell 0.69%, or 56.81 points, to 8,173.87.
- Taiwan Semiconductor Manufacturing Co. shed 2.43% to Tw$100.5 while Hon Hai Precision was 0.52% lower at Tw$75.9.
Wellington eased 0.97%, or 46.29 points, to 4,736.39.
- Telecom fell 1.9% to NZ$2.33 and Warehouse Group was off 2.92% at NZ$3.66, while Air New Zealand rose 0.33% to NZ$1.52.
– Rappler.com
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