Asian shares lower as eyes turn to US budget, debt row

A passerby is reflected on the electronic stock board of a securities firm in Tokyo on Sept. 18, 2013. Asian markets mostly fell in edgy trading on Wednesday, Sept. 25, 2013, after Wall Street ended broadly lower as a row looms about the US budget and debt ceiling. AP PHOTO/SHIZUO KAMBAYASHI

HONG KONG—Asian markets mostly fell in edgy trading on Wednesday, after Wall Street ended broadly lower as a row looms about the US budget and debt ceiling.

With the deadline for a new budget agreement next Monday, investors are anxious that lawmakers on Capitol Hill reach an agreement that will avoid a shutdown of parts of the US economy.

However, with Republicans calling for cuts to President Barack Obama’s healthcare law in the budget before they agree to any lifting of the country’s borrowing limit, investors are preparing for a painful standoff.

Tokyo slipped 0.76 percent, or 112.08 points, to 14,620.53 and Seoul lost 0.45 percent, or 9.04 points, to 1,998.06. Shanghai closed down 0.41 percent, or 9.02 points, at 2,198.52.

However, Sydney rose 0.80 percent, or 41.7 points, to 5,275.9 and Hong Kong rose 0.13 percent, or 30.59 points, to 23,209.63.

Global markets have been choppy since last Thursday’s rallies following the US Federal Reserve’s surprise decision to keep its massive stimulus program in place for now.

Officials have warned that if a budget is not passed by the end of Monday some parts of the US government will have to be shut down, with hundreds of thousands of federal workers ordered to stay home with no pay.

Compounding the crisis is the Republicans’ refusal to agree to lift the US debt ceiling from $16.7 trillion—which must be achieved by mid-October—unless there are cuts to Obamacare.

Treasury Secretary Jacob Lew said: “There is no plan after we run out of borrowing authority that will give us the ability to meet all the obligations of the United States.

“It is not a line which you cross.”

If the borrowing limit is not raised the US will not be able to service its debt obligations and will in turn default.

The row is similar to a standoff two years ago that saw Washington come perilously close to defaulting, sending global markets spiralling downwards and leading to a historic downgrade of the country’s AAA debt rating by Standard & Poor’s.

The uncertainty weighed on US shares on Wall Street, with the Dow falling 0.43 percent and the S&P 500 dropping 0.26 percent while the Nasdaq was flat.

“The potential of a 2011-type fallout is burning red hot in the minds of investors,” Parry International Trading managing director Gavin Parry said in Hong Kong, according to Dow Jones Newswires.

In forex trade the dollar was changing hands at 98.56 yen, compared with 98.74 yen late in New York. The euro bought $1.3468 against $1.3469 and 132.75 yen compared to 133.00 yen.

Currency dealers remain uncertain about the future of the Fed’s $85 billion a month bond-buying stimulus following mixed signals from officials since the bank’s announcement last week.

On oil markets New York’s main contract, West Texas Intermediate for delivery in November, climbed 23 cents to $103.36 a barrel in afternoon trade. Brent North Sea crude for November added 21 cents to $108.85.

Gold cost $1,320.56 at 0810 GMT compared with $1,315.50 on Tuesday.

In other markets:

— Mumbai fell 0.32 percent or 63.97 points to 19,856.24 points.

India’s financial firm Financial Technologies fell 10.25 percent to 150.25 rupees while private energy giant Reliance Industries fell 2.93 percent to 848.70 rupees.

— Bangkok rose 1.35 percent, or 19.13 points, to close at 1,436.90.

Coal producer Banpu gained 2.39 percent to 300 baht, while Thai Airways International added 3.70 percent to 19.60 baht.

— Kuala Lumpur shed 0.47 percent, or 8.42 points, to 1,784.06.

Malayan Banking dipped 1.2 percent to 9.85 ringgit, Public Bank lost 0.56 percent to 17.78 while Sime Darby added 0.11 percent to 9.51 ringgit.

— Jakarta ended down 1.20 percent, or 53.65 points, at 4,406.77.

Bank Negara Indonesia dropped 2.25 percent to 4,350 rupiah, while food maker Indofood Sukses Makmur gained 0.75 percent to 6,750 rupiah.

— Singapore closed down 0.10 percent, or 3.17 points, at 3,208.58.

Oversea-Chinese Banking Corporation gained 0.48 percent to Sg$10.44 while agribusiness company Wilmar International eased 0.92 percent to Sg$3.23.

— Taipei slipped 0.18 percent, or 15.22 points, to 8,283.90.

Smartphone maker HTC fell 3.6 percent to Tw$135.0 while Taiwan Semiconductor Manufacturing Co. was 1.91 percent lower at Tw$103.0.

— Manila dropped 0.63 percent, losing 40.96 points to end at 6,420.42.

Metropolitan Bank eased 0.66 percent to 89.65 pesos and Alliance Global lost 0.58 percent to 25.80 pesos, while LT Group plunged 6.06 percent to 17.04 pesos.

— Wellington added 1.15 percent, or 54.14 points, to 4,764.72.

Contact Energy was up 1.53 percent at NZ$5.30 and Fletcher Building gained 0.63 percent to NZ$9.59.