Asian marts track Wall Street gains

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HONG KONG: Asian markets mostly rose on Wednesday following a positive lead from Wall Street, with investors betting that US lawmakers will quickly reach a deal to end the government shutdown.

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However, traders are nervous as Republicans and Democrats—still gridlocked over a budget bill—have just over two weeks to strike a separate deal on raising the country’s debt ceiling and avoiding a painful default.

Tokyo tumbled 2.17 percent, or 314.23 points to 14,170.49 as the dollar weakened against the yen. But Sydney added 0.17 percent, or 8.8 points to close at 5,215.6, while Seoul edged up 0.60 points to 1,999.47. Hong Kong ended 0.55 percent, or 124.62 points higher at 22,984.48.

Shanghai and Mumbai were closed for public holidays. A day after the US government shut down for the first time in 17 years, lawmakers remain at loggerheads over the budget, with Democrats refusing to give in to Republican demands for cuts in President Barack Obama’s flagship health law.

However, investors for now seem unruffled by the crisis, which has seen about 800,000 federal workers sent home and several agencies closed or on skeleton staffing.

Wall Street enjoyed healthy gains, with the Dow adding 0.41 percent, the S&P 500 advancing 0.80 percent, and the Nasdaq rallying 1.23 percent. US shares were also boosted by a better-than-expected jump in US manufacturing activity that indicated a sustained pick-up in the economy.

The Institute for Supply Management’s purchasing managers’ index for manufacturing activity rose to 56.2 percent in September from 55.7 percent in August.

Anything above 50 points to growth, while a figure below that indicates contraction.

There’s been “no sign of panic from investors but the crucial issue remains the debt ceiling deadline,” Andrew Sullivan, head of sales trading at broker Kim Eng in Hong Kong, told Dow Jones Newswires.

The US Treasury has warned that it will not be able to pay its bills if the US borrowing limit is not raised by October 17, reviving memories of a stand-off in 2011 that sent global markets tumbling and led to a downgrade of Washington’s “AAA” sovereign debt rating.

However, analyst Kathy Lien of BK Asset Management, said: “We believe the chance of default is less than 5 percent and a government shutdown won’t last for more than two weeks.”

On currency markets, the dollar slipped against the yen, although investors said that the modest fall showed investors’ faith that a deal will be reached. The dollar bought 97.40 yen against 97.94 yen in New York City, while the euro fetched $1.3529 and 131.78 yen compared with $1.3527 and 132.51 yen.

Adding to greenback selling pressure is a growing expectation that the US Federal Reserve will delay winding down its stimulus program in the near future because of uncertainty caused by the shutdown. Economists said that there was little apparent impact from Tuesday’s announcement of a rise in Japan’s sales tax and an economic stimulus package worth 5 trillion yen, as they were well within expectations.

AFP

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