HONG KONG: Asian markets slipped on Tuesday following losses on Wall Street, as attention turns to a brewing budget row in Washington that threatens to shut down parts of the US economy.
The euro — which enjoyed a boost from Chancellor Angela Merkel’s weekend election win in Germany — also retreated after the head of the European Central Bank (ECB) aired concerns about interest rates.
Tokyo edged down 9.81 points to 14,732.61 on its first day of trading after a long weekend, with a slightly stronger yen weighing on exporters. Sydney eased 0.35 percent, or 18.3 points, to 5,234.2 and Seoul lost 0.11 percent, or 2.31 points, to close at 2,007.10.
Shanghai lost 0.61 percent, or 13.51 points, to 2,207.53 while Hong Kong was down 0.43 percent in afternoon trading.
Shares were also suffering from profit-taking after Thursday’s rallies that were fuelled by the US Federal Reserve’s surprise decision to keep its stimulus programme unchanged for now.
With the fiscal year ending on September 30, US lawmakers are unable to reach a compromise on the budget. President Obama is refusing to agree to Republican demands that would see huge cuts to his landmark health care law.
Should they fail to find a compromise several government agencies will close on October 1, putting hundreds of thousands of non-essential staff on unpaid leave.
Obama is also facing another battle to raise the country’s debt ceiling as the government is expected to run out of cash in the middle of next month, meaning it could default on its repayment obligations.
A similar standoff in 2011 sent global markets slumping and led to the historic downgrade of the US sovereign debt rating.
White House senior advisor Dan Pfeiffer accused Republicans of caring “more about scoring political points on Obamacare than keeping the government open and our economy moving forward”.
On Wall Street Monday the Dow fell 0.32 percent and the S&P 500 lost 0.47 percent. The Nasdaq shed 0.25 percent despite a surge in Apple shares after the computer giant said it sold nine million new iPhones over the three-day launch weekend.