TOKYO — Asian shares rose yesterday amid caution about the chances of United States lawmakers striking a deal to avoid a fiscal crunch by December 31, while the yen hit a 21-month low against the dollar on the prospect of drastic monetary easing and massive State spending.
In a sign that there may be a way to break the deadlock in Congress, Republican House of Representatives Speaker John Boehner urged the Democrat-controlled Senate to act to pull back from the cliff, and offered to at least consider any bill the upper chamber produced.
US President Barack Obama will try to revive budget crisis talks which stalled last week when he returns to Washington on Thursday after cutting short his Christmas holiday in Hawaii.
Economists warn that the “fiscal cliff” of higher taxes and spending cuts worth $600 billion in the world’s largest economy could hurl it into recession, dragging other economies with it.
Such concerns pushed up a gauge of investor anxiety, the CBOE Volatility Index, to 19,48 its highest close since late July, also underpinning the dollar as the fiscal impasse continues to sap investor appetite for risky assets, raising the dollar’s safe-haven appeal.
“The consequences of (US lawmakers) not coming to some arrangement are very, very harsh and I think it’s all politicking at the moment and we’ll see some resolution,” said Winston Sammut, investment director, Maxim Asset Management.
There were some signs of economic improvement in the Asian region, with data showing profits earned by China’s industrial companies jumped 22,8% in November from a year earlier, accelerating from October’s 20,5%.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0,3%, with Australian shares adding 0,3% and Hong Kong shares adding 0,4%, though Shanghai and Seoul shares were down.
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US stocks fell slightly in thin volume, and European markets were shut for the Christmas holiday.
London copper rose 1,7% to a one-week high of $7 932 a tonne on the positive data from the world’s top copper buyer China.
US crude futures were down 0,2% at $90,80 a barrel, after rising overnight to the highest in more than nine weeks on hopes that renewed talks will prevent a US fiscal crisis. Brent crude eased 0,2% to $110,83.
