Asia Roundup: Down on US default concerns

HONG KONG: Asian stocks fell yesterday on growing concern that US lawmakers will not break a deadlock on a deal to avert a default by the world's richest country.

Adding to downward pressure was news from Washington that a vote on a plan drawn up by Republican leaders had to be abandoned as they failed to convince hardline members of their own party.

With the clock ticking on the August 2 deadline, when the Treasury says it will run out of cash, global markets are looking to Washington, where the White House, Democrats and Republicans have failed to agree a deficit-cutting plan.

Tokyo ended 0.69 per cent, or 68.32 points, lower at 9,833.03 as data showing an improvement in industrial production was outweighed by disappointing earnings results, including from Nintendo, which suffered a huge sell-off.

Sydney lost 39.2 points to end at 4,424.6 and Seoul shed 22.64 points, to end at 2,133.21 while, Shanghai shed 0.26 per cent, or 7.05 points, to 2,701.73.

Politicians on Capitol Hill have been unable to reach a compromise deal that would allow the government to raise the debt ceiling above its current US$14.3 trillion.

Most experts agree that a default by the US could send seismic ripples through the global economy and lead to another downturn like that of 2008.

However, there is an expectation the deadlock will be broken, with the White House saying it is confident "sanity will prevail in the US Congress and they will reach a compromise". The impasse hit Wall Street, with the Dow losing 0.51 per cent, the S&P 500 down 0.32 per cent and the Nasdaq flat.

In other markets:
* Taipei fell 1.40 per cent, or 123.02 points, to 8,644.18.
Taiwan Semiconductor Manufacturing Company shed 1.37 per cent to Tw$72.0 while computer maker Acer was 0.25 per cent down to Tw$39.95.

* Manila rose 0.46 per cent, or 20.83 points, to 4,503.63. Alliance Global Group gained 1.6 per cent to 11.58 pesos, Banco de Oro was up 0.4 per cent at 63.95 pesos and Philippine Long Distance Telephone added 0.8 per cent to 2,400 pesos.

* Wellington closed flat, edging down 1.16 points to 3,395.63. Telecom lost 1 per cent to NZ$2.63 while Mainfreight added 1.5 per cent to NZ$10.50.

* Jakarta fell 0.36 per cent, or 15.02 points, to 4,130.80. - AFP