Global market: Asian shares mixed, US stocks drop on debt ceiling impasse

Asian shares traded mixed on Thursday after an overnight fall in the US stock market amid growing worries over US debt default as negotiations over lifting the US debt limit between President Joe Biden and House Speaker Kevin McCarthy have so far remained unfruitful. 

Fitch Ratings put the United States' “AAA” ratings on negative watch in a precursor to a possible downgrade should lawmakers fail to raise the debt limit.

Meanwhile, minutes from the US Federal Reserve meeting showed that the officials were divided on the need to raise interest rates.

Asian Markets

In Asia, the Bank of Korea kept the base rate unchanged at 3.50%, in line with estimates. South Korea’s Kospi rose marginally and the Kosdaq gained 0.27%.

Japan’s Nikkei 225 rallied 0.55%, while Topix fell 0.3%. 

Hong Kong’s Hang Seng declined 1.6%, while Singapore’s FTSE Straits Times Index eased 0.4%.

The SGX Nifty was trading 0.07% down at 18,272.

US Markets

All the three major US indices ended lower overnight amid increasing concerns over the debt ceiling and as Fitch Ratings put the United States’ AAA rating on negative watch. 

The Dow Jones Industrial Average declined 0.77%, the S&P 500 fell 0.73% and the Nasdaq Composite ended 0.61% lower.

Also Read: Day trading guide for today: Six buy or sell stocks for Thursday-May 25

Europe

European stocks slipped on Wednesday on little progress in the US debt ceiling talks and on a jump in UK core inflation.

The pan-European STOXX 600 index dropped 1.8%.

Britain’s FTSE 100 fell 1.8% at 7,627.10. Germany’s DAX lost 1.9% at 15,842.13. France CAC 40 plunged 1.7% at 7,253.46.

Currencies

The US dollar hit a fresh two-month high against a basket of peers, bolstered by recent signs of a resilient US economy, while unease over US debt ceiling talks kept investors moving to safe havens.

Energy

Crude oil prices fell in early Asian trade after uncertainty that the United States will avoid a debt default weighed against the prospect of further OPEC production cuts.

Brent crude futures fell 0.1% to $78.31 a barrel, while US West Texas Intermediate crude (WTI) fell 16 cents to $74.18.

Bullion

Gold prices were steady after minutes from the US Federal Reserve's last meeting signaled a likely pause in the rate-hike campaign in June, while debt ceiling negotiations kept investors on the edge.

Spot gold was flat at $1,957.69 per ounce. US gold futures were down 0.2% at $1,960.10.

(With inputs from Reuters)