Asian stock market: Asian shares were mixed on Tuesday after more talks in Washington on government debt. Shanghai and Hong Kong declined while Tokyo and Sydney advanced. Oil prices increased.
Wall Street’s benchmark S&P 500 index fell less than 0.1 percent on Monday as Congress and the White House negotiated Republican demands to cut social programs in exchange for increasing the amount the government can borrow.
“The resumption of debt ceiling talks has raised some hopes despite distinct risks of fragility and blame-shifting,” Mizuho Bank’s Tan Boon Heng said in a report.
The Shanghai Composite index fell 0.8 percent to 3,270.46 while the Nikkei 225 in Tokyo rose 0.6 percent to 31,286.70. The Hang Seng in Hong Kong closed down 0.3 per cent at 19,626.06.
The Kospi rose 0.8 percent to 2,576.48 in Seoul and Sydney’s S&P-ASX 200 added 0.4 percent to 61,963.68. New Zealand declined while Singapore and Jakarta advanced.
US debt a concern for investors
Worries about a possible US debt default have added to investor jitters about the health of the global economy after interest rates were hiked to reduce inflation and high-profile bank failures in the United States and Switzerland.
The US government estimates it will run out of money to pay its bills by June 1 if Congress does not increase the amount the Treasury is allowed to borrow. It would send tremors through global financial markets and could put a strain on an already weak global economy.
On Monday, President Joe Biden and House Speaker Kevin McCarthy said they had productive discussions at the White House on the debt ceiling but reached no agreement.
Republicans are determined to cut spending while Biden’s team offered to keep spending levels flat. Biden wants to raise some taxes on the richest Americans and some big companies. McCarthy said at the outset that this was out of the question.
Dow Jones Industrial Average fell 0.4%
The S&P 500 soared to 4,192.63. The Dow Jones Industrial Average closed down 0.4 percent at 33,286.58 and the Nasdaq Composite rose 0.5 percent at 12,720.78.
Stocks rallied last week on hopes of a deal, but fell on Friday when talks stalled.
Investors also expect the Federal Reserve to hold its key lending rate steady at its next meeting in June to spur steady business activity and inflation. This would be the first time the Fed has not announced a rate hike at a meeting in more than a year.
Micron Technology, the biggest US maker of memory chips, fell 2.8 percent on Sunday after the Chinese government banned the use of its products in sensitive computer systems, sparking a dispute with Washington over the technology and security. Beijing said Micron products posed unspecified “serious network security risks” that could affect national security.
meta platform saw growth
Meta Platforms rose 1.1 percent on news it was hit with a record $1.3 billion privacy fine by European regulators. Meta called the decision unfair and said it would appeal.
S&P 500 companies are in the midst of reporting a second straight quarter of profit declines from year-ago levels. The question is how much more they will suffer as the economy continues to slow down under the weight of very high interest rates to bring inflation under control.
In the bond market, the 10-year Treasury yield rose to 3.71 per cent from 3.68 per cent late on Friday. It helps set rates for mortgages and other important loans. The two-year yield, which trades higher on the Fed’s expectations, rose to 4.32 percent from 4.28 percent.
In energy markets, benchmark US crude rose 29 cents to $72.34 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 44 cents to US$71.99 on Monday. Brent crude, the price base for international oil trading, rose 26 cents to US$76.25 a barrel in London. It added 41 cents to USD 75.99 in the previous session. The dollar rose to 138.77 yen from Monday’s 138.56 yen. The euro declined to US$1.0805 from US$1.0819.