Asian stock markets: Asian stock markets were mixed Tuesday after more talks in Washington on government debt ended with no deal to avoid a potentially jarring default. Shanghai and Hong Kong declined while Tokyo and Sydney advanced. Oil prices rose.
Wall Street's benchmark S&P 500 index edged up less than 0.1 per cent on Monday as Congress and the White House negotiated over Republican demands to cut social programs in exchange for agreeing to raise the amount the government can borrow.
“The resumption of debt ceiling negotiations spurred some hopes despite distinct risks of brinksmanship and blame-shifting,” Tan Boon Heng of Mizuho Bank said in a report.
The Shanghai Composite Index sank 0.8 per cent to 3,270.46 while the Nikkei 225 in Tokyo gained 0.6 per cent to 31,286.70. The Hang Seng in Hong Kong shed 0.3 per cent to 19,626.06.
The Kospi in Seoul advanced 0.8 per cent to 2,576.48 and Sydney's S&P-ASX 200 added 0.4 per cent to 61,963.68. New Zealand declined while Singapore and Jakarta advanced.
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US debt a matter of concern for investors
Worries about a potential US debt default have added to investor unease about the health of the global economy following interest rate hikes to cool inflation and high-profile bank failures in the United States and Switzerland.
The U.S. government is forecast to run out of money to pay its bills as soon as June 1 if Congress doesn't increase the amount the Treasury is allowed to borrow. That would send shockwaves through global financial markets and could weigh on an already weakening global economy.
On Monday, President Joe Biden and House Speaker Kevin McCarthy said they had a productive debt ceiling discussion at the White House but reached no agreement.
Republicans are determined to cut spending while Biden's team offered to hold spending levels flat. Biden wants to increase some taxes on the wealthiest Americans and some big companies. McCarthy said early on that that is out of the question.
Dow Jones Industrial Average fell 0.4%
The S&P 500 advanced to 4,192.63. The Dow Jones Industrial Average fell 0.4 per cent, to 33,286.58 and the Nasdaq composite rose 0.5 per cent to 12,720.78.
Stocks rallied last week on hopes for a deal but fell back Friday when negotiations hit a roadblock.
Investors also hope the Federal Reserve will hold its key lending rate steady at its next meeting in June after a run of increases to cool business activity and inflation. That would be the first time the Fed hasn't announced a rate hike at a meeting in more than a year.
Micron Technology, the biggest U.S. maker of memory chips, dropped 2.8 per cent after the Chinese government on Sunday banned use of its products in sensitive computer systems, stepping up a feud with Washington over technology and security. Beijing said Micron products had unspecified “serious network security risks” that could affect national security.
Meta Platforms see a rise
Meta Platforms rose 1.1 per cent after shaking off news that European regulators hit it with a record USD 1.3 billion privacy fine. Meta called the decision unjustified and said it would appeal.
S&P 500 companies are in the midst of reporting a second straight quarter of profit drops from year-ago levels. The question is how much worse they will get because the economy is slowing under the weight of much higher interest rates meant to get inflation under control.
In the bond market, the 10-year Treasury yield rose to 3.71 per cent from 3.68 per cent late Friday. It helps set rates for mortgages and other important loans. The two-year yield, which moves more on expectations for the Fed, rose to 4.32 per cent from 4.28 per cent.
In energy markets, benchmark U.S. crude gained 29 cents to USD 72.34 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 44 cents on Monday to USD 71.99. Brent crude, the price basis for international oil trading, advanced 26 cents to USD 76.25 per barrel in London. It added 41 cents the previous session to USD 75.99. The dollar rose to 138. 77 yen from Monday's 138.56 yen. The euro declined to USD 1.0805 from USD 1.0819.
