HONG KONG: Asian markets were mixed on Tuesday after political gridlock in Washington triggered the first US government shutdown in 17 years, while upbeat regional economic data provided some cheer.
The dollar edged down against the yen, with investors saying the Capitol Hill stand-off made it less likely the Federal Reserve would start winding down its stimulus program soon.
Tokyo gained 0.20 percent or 28.92 points to 14,484.72, and Seoul added 0.10 percent or 1.91 points to 1,998.87, but Sydney fell 0.23 percent or 12.1 points to 5,206.8.
Hong Kong and Shanghai were closed for a public holiday.
The US government shut down at midnight Washington time as Republicans and Democrats refused to give ground to reach a budget deal.
World markets had expected the deadline to pass with no breakthrough and shares had fallen in previous sessions.
Europe’s main stock markets were also mixed at the start of trade. London’s FTSE 100 dipped 0.06 percent, the CAC 40 in Paris was up 0.16 percent, and Frankfurt’s DAX 30 rose 0.28 percent.
The US closure will see about 800,000 federal staff told to stay at home, leading to the closure of numerous agencies in the first shutdown since 1996. President Barack Obama warned that will cause a nascent recovery in the world’s biggest economy.
Obama accused Republicans of holding America to ransom with their “extreme” political demands for his flagship healthcare law to be delayed for a year, before they give the go-ahead to any budget.
Tracey Warren of CMC Markets Stockbroking told Dow Jones Newswires: “A prolonged shutdown could have a major impact on confidence and on the US economy, and will likely see a delay in the release of [US] employment figures.”
Adding to the sense of crisis, the two sides appear unlikely to reach a deal to lift the US borrowing limit by mid-October, when the government runs out of cash. This would leave it unable to service its debts and in turn possibly default.
However, Song Seng Wun, a regional economist with Malaysian bank CIMB, told Agence France-Presse: “Asian markets are trying to see beyond what is an obvious case of politics coming in the way of common sense.”
He said that markets expect that the shutdown “would likely be temporary”.
Japan confidence surges
Market-watchers said that investors seemed more interested in data nearer home.
In Japan, the central bank’s quarterly Tankan survey surged to its strongest level since December 2007, showing that major manufacturers are confident about future prospects.
Prime Minister Shinzo Abe said on Tuesday that he would press ahead with a sales tax rise seen as crucial to cutting Tokyo’s huge national debt. Critics say it could derail a recovery in Japan.
Jiji Press reported that Abe has decided to increase the tax from 5 percent to 8 percent.
The premier is also expected to unveil a stimulus package to help soften the blow.
In afternoon Tokyo trade, the greenback was at 97.96 yen from 98.21 yen in New York City. It had touched 98.70 in morning trade and 98.21 yen in New York City on Monday afternoon.
The euro bought $1.3567 compared with $1.3524, while it fetched 132.89 yen against 132.81 yen.
In China, the official purchasing managers’ index of manufacturing activity crept up to a 17-month high of 51.1 last month from 51 in August, the National Bureau of Statistics said.
A reading above 50 indicates expansion while anything below signals contraction.
It is the latest in a series of recent data indicating the Chinese economy is picking up steam after suffering a slowdown in the first half of the year.
A separate survey by HSBC came in at 50.2 on Monday, up from 50.1 in August and much higher than an 11-month low of 47.7 in July.