Asian shares dip on continued US shutdown
Shares throughout Asia came under pressure on October 7 as politicians in Washington showed no signs of making progress to resolve the US budget standoff. The US dollar and the oil also dropped, while gold inched higher.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.5 per cent, and its 12-month forward price-to-earnings ratio stood at 11.8, below a 10-year average of 12.4. Japan’s Nikkei share average dropped 1.1 per cent, extending last week’s 5 percent tumble – it biggest weekly fall since early August 2013.
Bursa Malaysia’s KLCI Index and Jakarta’s JCI were in the red in early trading, while indices in Thailand, the Philippines and Singapore were so far in the green.
Democrats and Republicans in the US remained far apart on ending the government shutdown, let alone reaching a deal on the US borrowing limit by October 17 to avoid an unprecedented default, which could cause much bigger trouble.
With no resolution in sight, US treasury secretary Jack Lew warned that congress is “playing with fire” as he called on lawmakers to quickly pass legislation reopening the government and a measure increasing the nation’s $16.7 trillion debt limit.
Lew said that while treasury expects to have $30 billion of cash on hand on October 17, that money will be quickly exhausted in paying incoming bills given that the government’s payments can run up to $60 billion on a single day.
“A default would be unprecedented and has the potential to be catastrophic,” a Treasury report said. “Credit markets could freeze, the value of the dollar could plummet, US interest rates could skyrocket, the negative spillovers could reverberate around the world.”
However, some republicans, such as Rep. Steve King of Iowa, dismiss the warnings about a government default as an “exaggeration”, suggesting US credit won’t collapse and calling the talk “a lot of false demagoguery”.
Shares throughout Asia came under pressure on October 7 as politicians in Washington showed no signs of making progress to resolve the US budget standoff. The US dollar and the oil also dropped, while gold inched higher. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.5 per cent, and its 12-month forward price-to-earnings ratio stood at 11.8, below a 10-year average of 12.4. Japan's Nikkei share average dropped 1.1 per cent, extending last week's 5 percent tumble - it biggest weekly fall since early August 2013. Bursa Malaysia's KLCI Index and Jakarta's JCI were in the red in early...
Shares throughout Asia came under pressure on October 7 as politicians in Washington showed no signs of making progress to resolve the US budget standoff. The US dollar and the oil also dropped, while gold inched higher.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.5 per cent, and its 12-month forward price-to-earnings ratio stood at 11.8, below a 10-year average of 12.4. Japan’s Nikkei share average dropped 1.1 per cent, extending last week’s 5 percent tumble – it biggest weekly fall since early August 2013.
Bursa Malaysia’s KLCI Index and Jakarta’s JCI were in the red in early trading, while indices in Thailand, the Philippines and Singapore were so far in the green.
Democrats and Republicans in the US remained far apart on ending the government shutdown, let alone reaching a deal on the US borrowing limit by October 17 to avoid an unprecedented default, which could cause much bigger trouble.
With no resolution in sight, US treasury secretary Jack Lew warned that congress is “playing with fire” as he called on lawmakers to quickly pass legislation reopening the government and a measure increasing the nation’s $16.7 trillion debt limit.
Lew said that while treasury expects to have $30 billion of cash on hand on October 17, that money will be quickly exhausted in paying incoming bills given that the government’s payments can run up to $60 billion on a single day.
“A default would be unprecedented and has the potential to be catastrophic,” a Treasury report said. “Credit markets could freeze, the value of the dollar could plummet, US interest rates could skyrocket, the negative spillovers could reverberate around the world.”
However, some republicans, such as Rep. Steve King of Iowa, dismiss the warnings about a government default as an “exaggeration”, suggesting US credit won’t collapse and calling the talk “a lot of false demagoguery”.
