Asian markets mostly lower as US cuts kick in
AFPHONG KONG -- Asian markets mostly fell Monday after U.S. lawmakers failed to prevent the imposition of US$85 billion in spending cuts that kicked in at the end of last week.
March 5, 2013, 12:35 am TWN
Chinese shares suffered the biggest sell-off with property developers hit by measures to cool the housing market, but Tokyo enjoyed modest gains as the man tapped to become Japan's top central banker vowed to tackle deflation.
Shanghai lost 3.65 percent, or 86.10 points, to end at 2,273.40, Sydney slipped 1.49 percent, or 75.6 points, to 5,010.5, and Seoul was off 0.66 percent, or 13.34 points, at 2,013.15. Hong Kong lost 1.50 percent, shedding 342.41 points to 22,537.81.
Tokyo put on 0.40 percent, or 45.91 points, to close at 11,652.29.
U.S. politicians traded barbs over the weekend after the “sequester” of deep federal spending cuts that kicked in on Friday, with most economists warning it will lead to rising unemployment and dent economic growth.
The White House said Sunday that as voters start to feel the pain, Republicans will pivot and seek compromise.
But the Republicans did not sound like they were in any mood to budge, with the party's Senate leader Mitch McConnell saying the American people understood it was time for belt-tightening.
There had been hope that Democrats and Republicans would be able to reach a compromise to cut the budget that would not be as painful, but last-minute talks failed Thursday.
However, despite the lack of movement in Washington, investors are confident a deal will eventually be made. Wall Street got a boost after fresh data that showed consumer spending rose in January at double the rate of December, despite lower personal income.
There was further cheer from a report that showed U.S. manufacturing activity hit the highest level since mid-2011.