US Debt Talks

Published: November 22, 2011

US Debt Talks, The failure of negotiations to reduce the staggering U.S. budget deficit weighed on Asian stock markets Tuesday, but failed to stifle a rebound in oil Europe.Benchmark rose above 97 per barrel, while the dollar slipped against the euro and the yen.

European shares rebounded in early trading, after net losses Monday. UK FTSE 100 added 1.1 percent to 5,280.31. German DAX raised 1.2 percent to 5,671.74 and France the CAC-40 gained 1.4 percent to 2,936.53.

Wall Street was also directed to a more open, with Dow Jones Industrial futures up 0.4 percent to 11,568. S & P 500 $ futures rose 0.6 percent to 1,197.80.

Shares in Asia find it difficult to progress after losses Monday on Wall Street. Japan Nikkei 225 Index fell 0.4 percent to 8314.74, its lowest close since March 2009.

Australia S & P / ASX 200 fell 0.7 percent in 4133. China’s Shanghai Composite Index edged 0.1 percent lower at 2,412.63. Benchmarks in Taiwan, Malaysia and New Zealand also fell.

But Hong Kong Hang Seng erased early losses; rising 0.1 percent to close at 18,251.59 and the index of South Korea increased 0.3 percent to 1,826.28 Kospi.

Investor nervousness intensified Monday after a supercommittee said Congress could not reach an agreement to reduce the U.S. federal budget deficit by the $ 1.2 trillion over 10 years. Although not entirely unexpected, the failure led to heavy selling on Wall Street.

The impasse has emphasized deficit reduction doubts the political will in Washington to make tough decisions and drew a rare rebuke from Japanese Finance Minister Azumi June

“The Democratic and Republican lawmakers must stand in the shoes of the general public. The key to market stability lies in how the parties could compromise to an agreement, “Azumi told a news conference in Tokyo.

The stalemate in Washington comes at a time of economic weakness in Europe, which is reeling from a debt crisis and recession worries spread.

One European country after another fell into a crisis because of the debt. Beware of the country’s ability to repay their loans; bond investors have emphasized higher yields on domestic bonds, pushing borrowing costs to dangerous levels.

Adding to the pessimism was a warning by Moody AAA ratings that France could face a downgrade because of the debt crisis in Europe has pushed borrowing costs higher for the French government.

Clouds are also met in Asia, where Singapore – considered a barometer of the Western demand for its very high dependence on trade – said Monday its economy would probably experience a downturn in 2012 as commands export of developed countries fade.

“I think we are looking to perhaps 2 percent growth for the whole world. For a normal year, global economic growth will be 4 percent, but now it has revised down by about 2 percent so you take a big chunk of GDP … around the world, “said Francis Lun, general manager of Lyncean Holdings in Hong Kong.

The losses among Asian populations were large and included banks and share of consumption.

Hong Kong-listed China Construction Bank and Australia & New Zealand Banking Group fell 1.1 percent at a time. Hong Kong-listed GOME Electrical Appliances slipped 1.9 percent and China Garments Co. lost 2.3 percent.


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