- POSTED: 02 Oct 2013 16:26
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Asian markets mostly rose on Wednesday following a positive lead from Wall Street, with investors betting that US lawmakers will quickly reach a deal to end the government shutdown.
HONG KONG: Asian markets mostly rose on Wednesday following a positive lead from Wall Street, with investors betting that US lawmakers will quickly reach a deal to end the government shutdown.
However, traders are nervous as Republicans and Democrats -- already gridlocked over a budget bill -- have just over two weeks to strike a separate deal on raising the country's debt ceiling and avoiding a painful default.
Tokyo tumbled 2.17 per cent, or 314.23 points, to 14,170.49 as the dollar weakened against the yen. But Sydney added 0.17 per cent, or 8.8 points, to close at 5,215.6 while Seoul edged up 0.60 points to 1,999.47.
Hong Kong ended 0.55 per cent, or 124.62 points, higher at 22,984.48.
Shanghai and Mumbai were closed for public holidays.
In other markets, Taipei rose 0.36 per cent, or 29.50 points, to 8,216.52 and Manila ended 2.65 per cent higher, adding 164.42 points to 6,362.28.
A day after the US government shut down for the first time in 17 years, lawmakers remain at loggerheads over the budget, with Democrats refusing to give in to Republican demands for cuts in President Barack Obama's flagship health law.
However, investors for now seem unruffled by the crisis, which has seen about 800,000 federal workers sent home and several agencies closed or on skeleton staffing.
Wall Street enjoyed healthy gains, with the Dow adding 0.41 per cent, the S&P 500 advancing 0.80 per cent and the Nasdaq rallying 1.23 per cent.
US shares were also boosted by a better-than-expected jump in US manufacturing activity that indicated a sustained pick-up in the economy.
The Institute for Supply Management's purchasing managers' index for manufacturing activity rose to 56.2 per cent in September from 55.7 per cent in August. Anything above 50 points to growth, while a figure below indicates contraction.
There's been "no sign of panic from investors but the crucial issue remains the debt ceiling deadline", Andrew Sullivan, head of sales trading at broker Kim Eng in Hong Kong, told Dow Jones Newswires.
The Treasury has warned that it will not be able to pay its bills if the US borrowing limit is not raised by October 17, reviving memories of a stand-off in 2011 that sent global markets tumbling and led to a downgrade of Washington's AAA sovereign debt rating.
However, analyst Kathy Lien of BK Asset Management, said: "We believe the chance of default is less than five per cent and a government shutdown won't last for more than two weeks."
On currency markets the dollar slipped against the yen, although investors said the modest fall showed investors' faith that a deal will be reached.
The dollar bought 97.40 yen against 97.94 yen in New York, while the euro fetched US$1.3529 and 131.78 yen compared with US$1.3527 and 132.51 yen.
Adding to greenback selling pressure is a growing expectation that the US Federal Reserve will delay winding down its stimulus programme in the near future because of uncertainty caused by the shutdown.
Economists said there was little apparent impact from Tuesday's announcement of a rise in Japan's sales tax and an economic stimulus package worth 5 trillion yen, as they were well within expectations.
On oil markets, New York's main contract, West Texas Intermediate for delivery in November, fell 41 cents to US$101.63 in afternoon trade. Brent North Sea crude for November dipped 35 cents to US$107.59.
Gold cost US$1,289.58 at 0800 GMT compared with US$1,330.77 on Tuesday.