Asian markets mostly fall as US lawmakers bicker

HONG KONG—Asian markets mostly fell on Thursday, following big losses on Wall Street, as the deadline approaches for US lawmakers to strike a deal to avert a disastrous default.

Adding to selling pressure was a decision by Standard & Poor’s to further downgrade Greece’s credit rating, saying plans to restructure the country’s debt would entail a default.

Tokyo tumbled 1.45 percent, or 145.84 points, to 9,901.35 as the economic uncertainty sent traders into the safe-haven yen, which hurts Japanese exporters.

Sydney shed 1.62 percent, or 73.6 points, to 4,463.8 and Seoul gave up 0.85 percent, or 18.46 points, to end at 2,155.85 while Shanghai lost 0.54 percent, or 14.72 points, to 2,708.78.

However, Hong Kong staged a late rally to close 0.13 percent, or 29.05 points, higher at 22,570.74.

The White House and Democrats and their Republican rivals continue to bicker over a deficit-slashing plan that would allow a hike in the US debt ceiling, despite the government running out of money to pay its bills within a week.

The House of Representatives is due later Thursday to take up Republican Speaker John Boehner’s plan for raising the $14.3 trillion debt limit, although it will likely fail due to a White House veto threat.

In anticipation of this, lawmakers are hunting for a compromise to avert a debt default, which threatens to have a devastating effect on global markets and the world economy.

Despite the August 2 deadline approaching with no sign of agreement, global markets had been relatively calm until Thursday, with investors saying they were confident Congress will strike a deal.

“The scary part of the story is the fact that markets have not priced in the US defaulting on its debt,” said CMC Markets analyst Ben Le Brun.

“Should the unthinkable happen in the next week then a throwback to the chaos of 2008 would again become a reality,” he told Dow Jones Newswires.

However, he added: “Should the majority of opinion be correct and the US does avoid a default, global markets do appear as if they are positioned for a relief rally of sorts.”

The troubles sent Wall Street stocks lower, with the Dow plunging 1.59 percent, the S&P 500 2.03 percent lower and the Nasdaq diving 2.65 percent.

Adding to traders’ woes was news of S&P’s Greek downgrade further into “junk” territory. The move follows a similar decision by rival agencies Moody’s and Fitch.

Last week, eurozone leaders agreed on a second multibillion-dollar bailout for Athens that will see it roll over some debt and pay less interest on its first rescue package.

But S&P said “the proposed restructuring of Greek government debt would amount to a selective default under our rating methodology”.

German Finance Minister Wolfgang Schaeuble also stoked fears when he said a rescue fund set up to help troubled economies did not have a “blank cheque” to buy back Greek bonds, referring to one of the key measures agreed at the crisis summit that drew up Greece’s bailout.

The euro, which on Wednesday hit a four-week high of $1.4530, fell in New York to end at $1.4364. In early European trade the single currency stood at $1.4366, while it also fetched 111.64 yen, down from 111.97. It had been at 113.02 yen in Asia Wednesday.

The dollar was at 77.68 yen, from 77.96 yen.

On oil markets New York’s main contract, light sweet crude for delivery in September, fell 28 cents to $97.12 per barrel in the afternoon.

Brent North Sea crude for September gained 39 cents to $117.82.

Gold closed in Hong Kong at $1,618 -$1,619 an ounce, down from Wednesday’s finish of $1,623-$1,624. The precious metal surged to a new record high of $1,628.05 in New York Wednesday.

In other markets:

— Singapore closed down 0.12 percent, or 3.69 points, to 3,189.85.

Keppel Corp fell 0.36 percent to 11.07 and CapitaLand shed 1.02 percent to 2.92.

— Taipei fell 0.57 percent, or 50.29 points, to 8,767.20.

TSMC was 0.54 percent lower at Tw$73.0 while Formosa Plastics rose 1.86 percent to Tw$109.5.

— Manila closed flat, edging down 0.09 points to 4,482.80.

Semirara Mining fell 1.5 percent to 230 pesos and Energy Development was down 0.6 percent at 6.79 pesos but Metropolitan Bank gained 0.2 percent to 77.10 pesos and Banco de Oro added 0.7 percent to 63.70 pesos.

— Wellington closed 0.46 percent, 15.56 points, lower at 3,396.79.

Fletcher Building shed 1.5 percent to NZ$8.13 while Mainfreight rose 2.0 percent to NZ$10.35.

— Jakarta lost 0.68 percent, or 28.29 points, to end at 4,145.82.

Car maker Astra International shed 4.3 percent to 71,750 rupiah, while Bank Mandiri lost 1.9 percent to 7,900 rupiah.

— Kuala Lumpur fell 0.40 percent, or 6.26 points, to 1,551.91.

Gaming giant Genting Malaysia lost 0.5 percent to 3.70 ringgit and Telekom Malaysia slipped 1.2 percent to 4.02.

Kuala Lumpur Kepong added 0.1 percent to 21.76 ringgit and Tenaga Nasional rose 0.2 percent to 6.11.

— Bangkok rose 0.32 percent, or 3.67 points, to 1,134.38.

Banpu lost 6 baht to 742, while Siam Cement gained 4 baht to 379.

— Indian shares fell 1.21 percent, with the benchmark 30-share Sensex index down 222.73 points to 18,209.52, its third straight day of losses.

India’s largest private aluminium producer Hindalco fell 2.92 percent or 5.05 rupees to 168 while infrastructure firm Reliance Infrastructure fell 2.95 percent or 16.65 rupees to 547.7.