Connect to share and comment
HONG KONG - Asian stock markets drifted Wednesday as investors weighed an IMF warning on the global economy and the continuing U.S. government shutdown with news that Federal Reserve vice chair Janet Yellen will be nominated to head the U.S. central bank.
The White House said President Barack Obama would nominate Yellen to succeed Ben Bernanke. She's a close ally of Bernanke and has been as a key architect of Fed efforts under his leadership to keep interest rates close to record lows to bolster the world's biggest economy, so her selection is seen as a sign that the policy will likely continue.
However, the market reaction was muted since Obama was widely expected to tap Yellen after front-runner and former Treasury Secretary Lawrence Summers withdrew his candidacy.
"So, Yellen's nomination ought to have been partly priced-in," said Vishnu Varathan of Mizuho Bank Ltd. in Singapore in an email commentary. "Finally, Yellen's views may not be too different to current consensus anyway."
On the other hand, investors were getting edgier about as the deadline to raise the debt ceiling drew closer. A failure to raise the limit by Oct. 17 would raise the possibility of a U.S. debt default, which has the potential to seriously roil global markets. Political wrangling over spending has already left the U.S. government partially shut for eight days.
The International Monetary Fund also weighed in, warning about the harm to the global economy if the U.S. failed to raise its borrowing limit, as it cut its global economic growth forecasts for 2013 and 2014.
Japan's Nikkei rose 0.5 per cent to 13,965.04 while Hong Kong's Hang Seng index fell 0.5 per cent to 23,053.88. In mainland China, the Shanghai composite index fell 0.1 per cent to 2,196.10 after initially rising. Australia's S
In the U.S., the Dow Jones industrial average fell 1.1 per cent to close at 14,776.53 while the S
In currencies, the euro fell to $1.3565 from $1.3602 in late trading Tuesday. The dollar rose to 97.34 Japanese yen from 96.85 yen.
Benchmark crude for November delivery fell 8 cents to $103.41 a barrel. The contract rose 46 cents to settle at $103.49 on Tuesday.
All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.