Most Asian markets edged higher Tuesday, with investors remaining on edge after US President Barack Obama and House Speaker John Boehner gave back-to-back speeches indicating little progress toward a deal to raise the debt limit.
Hong Kong’s Hang Seng Index HK:HSI +0.82 percent rose 0.6 percent, South Korea’s Kospi KR:0100 +0.18 percent gained 0.2 percent, Australia’s S&P/ASX 200 AU:XJO +0.81 percent advanced 0.8 percent, and Taiwan’s Taiex inched up 0.6 percent.
Japan’s Nikkei Stock Average JP:NIK +0.04 percent ended the morning session fractionally higher. China’s Shanghai Composite CN:000001 -0.02 percent fell 0.2 percent after changing direction a few times, and on top of Monday’s 3 percent tumble.
Trading was choppy, as the US moved closer to an August 2 deadline, after which the Treasury says it will no longer be able to meet debt obligations. Washington lawmakers offered dueling plans to avert a default, as a deal remained elusive. Read more on rival US debt proposals.
“The odds that the United States will face a ratings downgrade, even if the debt-ceiling is raised, have clearly risen,” said strategists at IHS Global Insight.
President Obama said in an address to the nation Monday evening that should a downgrade occur, investors would wonder if the US was a “good bet.”
He said the current debt standoff was a “dangerous game” but added he was confident a compromise would be reached in Congress before the deadline.
Speaking moments later, House Speaker John Boehner urged passage of a proposal from his Republican party, and also warned of the consequences of a default. Read more on Obama and Boehner speeches.
Financial stocks in Asia were broadly higher, recouping some of their losses from the previous session. Mitsubishi UFJ Financial Group Inc. JP:8306 +0.75 percent MTU -1.16 percent rose 0.8 percent in Tokyo, Westpac Banking Corp. AU:WBC +0.56 percent WEBNF -0.56 percent added 0.8 percent in Sydney, Shinhan Financial Group Co. SHG -2.49 percent advanced 1.2 percent in Seoul.
Among other gainers, Japan’s Canon Inc. JP:7751 +2.38 percent CAJ +2.05 percent rose 2.4 percent after hiking its profit forecast for the fiscal year. Some other Japanese exporters also managed modest gains despite the US dollar’s fall against the yen, with Toyota Motor Corp. JP:7203 +0.46 percent TM -1.04 percent up 0.5 percent, and Honda Motor Co. HMC -0.87 percent JP:7267 +0.47 percent adding 0.5 percent.
On the downside, shares of Tokyo Electric Power Co. JP:9501 -3.93 percent TKECF -2.95 percent declined 3.9 percent after a Nikkei report predicted a rise in fuel costs for power utilities this year. Peer Chubu Electric Power Co. JP:9502 -2.02 percent declined 2 percent. Read about Nikkei report on Japanese power-company fuel costs.
Gains in Hong Kong and Shanghai were led by Chinese banking and property names as investors looked for bargains after Monday’s losses. But railway-sector stocks remained weak after a deadly pileup of two high speed rail (HSR) trains Saturday.
In the banking sector, shares of Bank of Communications Co. BCMXY 0.00 percent HK:3328 +1.48 percent CN:601328 +0.62 percent added 1.3 percent and Agricultural Bank of China Ltd CN:601288 +0.38 percent HK:1288 0.00 percent climbed 0.5 percent in Hong Kong, with the pair up 0.6 percent and 0.4 percent, respectively, in Shanghai.
China Railway Construction Group Co. CWYCF -9.09 percent HK:1186 -4.95 percent CN:601186 -0.74 percent dropped 4 percent, and China Railway Group Co. CN:601390 -1.38 percent HK:390 -0.66 percent fell 0.7 percent in Hong Kong; the stocks dropped 0.9 percent and 1.1 percent, respectively, in Shanghai.
“We believe the high-speed rail tragedy last weekend will slow the pace of investment, at least in the near term, not only in HSR but also in subways, bridges and roads. Authorities may also further reduce the speed of the HSR to help restore public confidence,” Citigroup’s China equity strategist Shen Minggao wrote in a note to clients. -By Sarah Turner and V. Phani Kumar