Asian shares lifted by hopes for end to US debt crisis

People walk by an electronic stock board of a securities firm in Tokyo on Oct. 4, 2013. Asian shares were mostly higher Wednesday, Oct. 9, 2013, as US debt woes were offset by President Barack Obama’s offer of a short-term deal to end the political gridlock in Washington. AP PHOTO/KOJI SASAHARA

HONG KONG—Asian shares were mostly higher Wednesday as US debt woes were offset by President Barack Obama’s offer of a short-term deal to end the political gridlock in Washington.

There was also broad support for stocks and the dollar on news that Obama would nominate Janet Yellen to take over from Ben Bernanke as Federal Reserve chief, raising hopes the bank would stick to its easy money policy.

Tokyo climbed 1.03 percent, or 143.23 points, to 14,037.84 and Sydney ended flat, edging up 3.6 points to 5,153.0. Shanghai closed 0.62 percent higher, adding 13.57 points to 2,211.77 but Hong Kong finished 0.63 percent lower, giving up 144.88 points to 23,033.97.

Seoul was closed for a public holiday.

With the government shutdown moving into a ninth day, global investors are concerned Republicans and Democrats will not find a way round a budgetary impasse before an October 17 deadline to raise the borrowing limit.

Obama said Tuesday world leaders were nervous that Republicans would “blow up” the US economy if they did not abandon their demands for cuts to his healthcare law in return for passing a new budget and raising the borrowing limit.

Failure to raise the limit would mean the government could not pay its bills or service its debts, triggering a default that analysts have warned could send the world economy back into recession.

However, Obama did say he was willing to accept a short-term deal to raise the $16.7 trillion debt ceiling and reopen the government—effectively postponing the crisis for a number of weeks.

“If (the Republicans) can’t do it for a long time, do it for the period of time in which these negotiations are taking place,” he said.

Despite the president’s comment, Wall Street saw a big sell-off. The Dow fell 1.07 percent, the S&P 500 sank 1.23 percent and the Nasdaq tumbled 2.00 percent.

But Desmond Chua, market analyst at CMC Markets in Singapore, said Asian dealers welcomed Obama’s comments and the nomination of Yellen, considered a fiscal dove who will likely keep the bank’s stimulus programme in place for as long as needed.

“There is some support in the market after these two pieces of news, but investors are still well aware that a resolution still depends on the House, which remains deadlocked,” he told AFP.

Kelly Teoh, market strategist at IG Markets in Singapore, said: “(Yellen) is very much accepted by Asian investors because of her dovish stance on tapering and there is confidence that she will continue to keep interest rates low. Investors here see her as the closest to Bernanke.”

In late trade the dollar rose on the back of the Fed news, buying 97.32 yen compared with 96.86 yen in New York on Tuesday.

The euro fetched $1.3519 compared with $1.3572, and 131.60 yen against 131.47 yen.

On oil markets New York’s main contract, West Texas Intermediate for delivery in November, was down 15 cents at $103.34 in afternoon trade. Brent North Sea crude for November eased 35 cents to $109.81.

Gold cost $1,311.10 at 1035 GMT compared with $1,320.86 on Tuesday.

In other markets:

— Taipei eased 0.37 percent, or 30.92 points, to 8,344.73.

Taiwan Semiconductor Manufacturing Co. was unchanged at Tw$105.0 while leading chip design house MediaTek was 0.92 percent higher at Tw$382.0.

— Wellington fell 0.59 percent, or 28.05 points, to 4,710.63.

Contact Energy was down 0.19 percent at NZ$5.29 and Telecom eased 0.43 percent to NZ$2.30 but Warehouse Group gained 0.27 percent at NZ$3.68.

— Kuala Lumpur’s stock index fell 8.38 points, or 0.47 percent, to 1,769.12.

CIMB Group Holdings lost 0.8 percent to 7.40 ringgit, while UEM Sunrise fell 2.0 percent to 2.44. AirAsia gained 0.4 percent to 2.64 ringgit.

— Jakarta ended up 0.56 percent, or 24.93 points, at 4,457.44.

Bank Permata gained 0.72 percent to 1,400 rupiah, while miner Aneka Tambang fell 2.00 percent to 1,470 rupiah.

— Singapore closed up 0.27 percent, or 8.34 points, at 3,154.84.

Singapore Airlines eased 0.39 percent to Sg$10.15 while real estate developer CapitaLand gained 0.65 percent to Sg$3.12.

— Mumbai rose 1.33 percent, or 265.65 points, to close at 20,249.26.

India’s top property firm DLF rose 5.76 percent to 146.95 rupees, while Future Retail rose 5.70 percent to 77.0 rupees.

— Bangkok gained 0.04 percent or 0.60 points to 1,434.66.

Telecoms company True Corporation jumped 6.63 percent to 8.85 baht, while Siam Cement fell 0.92 percent to 432 baht.

— Manila slipped 1.19 percent, or 77.11 points, to 6,377.75.

Philippine Long Distance Telephone fell 2.34 percent to 2,926 pesos while Megaworld Corp. rose 3.8 percent to 3.55 pesos.—Danny McCord

Originally posted at 11:21 am | Wednesday, October 9, 2013