US at budget impasse, sequester' could hit growth if no deal is reached.
March 1, 2013
by THE ASSOCIATED PRESS
TOKYO — Stock markets in Asia were mixed as China’s manufacturing waned and many investors watched for progress on resolving an impasse that could bring on drastic spending cuts by the US government.
China’s manufacturing grew at its weakest rate in five months in February as demand faltered and factories shut down for the Lunar New Year holiday. Economic data from Japan showed a slight improvement in unemployment but a plunge in business investment and persisting deflation.
Tokyo’s Nikkei 225 stock index was up 0.3% while Hong Kong’s Hang Seng dropped 0.3%. Australia’s S&P/ASX 200 shed 0.5%. South Korean markets were closed for a public holiday. Mainland China’s benchmark fell 0.5%. Markets in Taiwan, Singapore and Malaysia were higher while shares in the Philippines and New Zealand lost ground.
Investors are keeping an eye on risks from US spending cuts due to take effect at the start of March as part of a previous budget agreement between the White House and Congress. The planned “sequester” could hit US growth if no deal is reached to avoid it, though past experience suggests a last-minute deal may be cobbled together.
Wall Street got a temporary boost from news the US economy grew at an annualized rate of 0.1% in the final three months of 2012 instead of contracting as estimated earlier but gains faded by the close of trading.
The Dow Jones industrial average ended with a loss of 20 points, or 0.2%. That’s 110 points below the record close it reached in October 2007. It came within 15 points of that level during the day Feb. 28.
The US dollar has rallied this week thanks to positive economic news and rising tensions over Italy. The euro was down 0.1% at $1.3078 while the dollar was up 0.1% at 92.67 yen.