Stocks in Asia Decline as Uncertainties over U.S. Debt-Ceiling Grow

Wednesday saw a decline in Asian market prices as investors were increasingly concerned about the lack of progress in talks to raise the US debt ceiling.

The Hang Seng index in Hong Kong was down 1.26% as of 9:28 a.m. Bangkok time, and the Hang Seng Tech index lost 1.72% due to heavy selling of Chinese internet giants including Alibaba, Baidu, and Tencent.

The Shanghai Composite Index dropped 0.95% in Mainland China.

The Nikkei 225 in Japan fell 1.03%, despite a Reuters Tankan poll finding that manufacturing confidence in the country had turned positive for the first time in 2023.

The S&P/ASX 200 in Australia fell by 0.40%, while the Kospi in South Korea dipped by 0.20%.

Overnight, all three major U.S. indices dropped, with the Nasdaq Composite falling by 1.26% and the S&P 500 dropping by 1.12%, the Dow Jones Industrial Average sliding by 0.69%.

Progress in US debt discussions remained limited on Tuesday, with some House Republicans voicing doubts about Treasury Department Secretary Janet Yellen’s deadline to increase the debt ceiling and avoid a default.

House Majority Leader Rep. Steve Scalise said during a news conference on Tuesday, “We’d like to see more transparency on how they come to that date.”

He also noted that Yellen’s statements from Monday indicate “openness to the idea that June 1 may not be the so called X-date.”

With little time left for legislators to reach an agreement, investors have started demanding higher premiums to retain US debt, especially that which carries the biggest risk of default. On Tuesday, the yield on securities maturing on June 6 surpassed 6%, while the yield on bills maturing on May 30 was about 2%.