Currencies dominated major moves in Asian trading Tuesday as the U.S. government entered a partial shutdown, while reactions in the region’s biggest stock markets were muted.
The Nikkei 225 index in Japan revived 28.92 points, or 0.2%, to 14,484.72
Markets in Shanghai and Hong Kong were closed for a holiday
Asian stock markets pulled back after a deadline passed for the U.S. government to avert a partial shutdown. Japanese shares eked out a small gain as Prime Minister Shinzo Abe decided to raise the country’s sales tax next year.
The U.S. government shutdown, which officially took effect during afternoon trading hours in Tokyo, weighed on stock prices as the dollar saw sell pressure.
In currency markets, the U.S. dollar enjoyed a brief intraday spike to a high of around 98.72 yen on the news of the sales tax hike but it fell to ¥97.98 in late Asian trade, compared with ¥98.23 late Monday in New York.
The Australian dollar rallied against the greenback despite growing uncertainty over the U.S. budget impasse, as a raft of strong economic reports and a decision by the Reserve Bank of Australia not to cut interest rates boosted the risk-sensitive currency. It traded at $0.9412 U.S. compared with $0.9305 U.S. late Monday in Asia.
In the metals markets, prices for nickel-often tied to global growth expectations--showed the biggest reaction, falling 0.9% to $2,098 U.S. per metric ton.
Price action was muted elsewhere in Asia. Stocks in Australia closed slightly lower after seesawing in a narrow range between positive and negative territory. South Korea’s Kospi pared gains as the deadline approached.
Traders said investors had largely positioned for the shutdown Monday as it became increasingly certain lawmakers would fail to agree on a budget before a Tuesday deadline. Stocks sold off across the region Monday.
Asian markets also appear to be growing increasingly immune to U.S. budget battles. They barely reacted 10 months ago as Congress fought over the so-called fiscal cliff.
Instead, markets in the region are focused more heavily when the U.S. Federal Reserve plans to slow the pace of its bond buying effort.
Earlier in the summer when investors became convinced the Fed would move soon, they fled the region’s developing economies, knocking down markets. When Fed action appeared less imminent, the markets posted a strong rebound, ending the quarter up nearly 7%.
In other markets;
Korea’s Kospi index eked forward 1.91 points, or 0.1%, to 1,998.87
Taiwan’s Taiex index regained 13.15 points, or 0.2%, to 8,187.02
The Singapore Straits Times Index moved up 13.63 points, or 0.4%, to 3,181.50
In New Zealand, the Exchange 50 Gross Index gained 7.48 points, or 0.2%, to 4,743.87
In Australia, the S&P/ASX 200 slipped 12.08 points, or 0.2%, to 5,206.80
