Asian shares up cautiously on hopes for short shutdown

HONG KONG: The U.S dollar treaded water and most Asian stock markets edged up on Wednesday as investors appeared hopeful the first partial U.S. government shutdown in 17 years will be short-lived and not have a broader impact on the economy.

However, one immediate impact is a drop-off in U.S. economic data at a time when the Federal Reserve has already muddied expectations on when will it start reducing its stimulus.

The failure of Congress to agree on a bill that funds government operations meant up to one million workers were put on unpaid leave, as Democrats and Republicans fight over
President Barack Obama’s healthcare programme.

On Tuesday, a survey by the private Institute of Supply Management (ISM) showed robust  U.S. manufacturing activity, with expansion at the fastest pace in almost 2-1/2 years.

But with the government shutdown, the news didn’t have a big impact on Asia. The MSCI’s broadest index of shares outside Japan  up 0.4 percent.

U.S. S&P futures eased 0.1 percent after the cash index advanced 0.8 percent on Tuesday.
Japan’s Nikkei, the most expensive in Asia based on price-to-earnings ratios, came in for profit-taking and was down 1.2 percent.

Korean stocks were up 0.4 percent and Indonesian stocks gained 1.2 percent. China markets are closed until Tuesday for holidays.

“Markets are taking it one day at a time with a near-term impact unlikely and any prolonged government deadlock only increases the likelihood of a delay in U.S. tapering,” said Kenneth Akintewe, a Singapore-based portfolio manager at Aberdeen Asset Management.