Asian markets mostly fell on Friday after Republicans scrapped a vote on putting in place a back-up plan if talks on averting the US fiscal cliff end in failure.
The news out of Washington late Thursday cancelled out a rally on Wall Street and upbeat data on the US economy, while it also hit currency traders, who have sent the safe-haven yen higher despite more Bank of Japan monetary easing. Tokyo fell 0.16 percent, Hong Kong lost 0.52 percent and Seoul shed 0.84 percent and Sydney was 0.12 percent lower, but Shanghai added 0.50 percent.
With just under two weeks to go before huge tax hikes and spending cuts are due to kick in — and likely tip the economy into recession — US lawmakers are still unable to reach a compromise that will avert the fiscal cliff. Late Thursday in Washington Republican House Speaker John Boehner scrapped a vote on a bill that would have extended tax cuts for all Americans earning less than $1 million even if a wider deal could not be struck.
The move, which he described as his “Plan B”, was dropped because he did not have enough support. Boehner said his party would recess until after Christmas.
The measure had been blasted by President Barack Obama’s Democrats as a diversionary tactic that would never have passed in the Senate, where they hold a majority. Now both parties must come up with a budget that will cut the country’s deficit with less painful measures before the start of January, when they take effect. Wall Street ended in positive territory on Thursday, however, lifted by fresh data further indicating the US economy is getting back on its feet. The Commerce Department said the economy grew 3.1 percent in the third quarter, up from the estimates of 2.7 percent and 2.0 percent previously stated. The figure reflects upward revisions to consumer spending, exports and government outlays, and a downward revision to imports. Also Thursday the National Association of Realtors said existing home sales rose 5.9 percent month-on-month in November to their highest level in three years. The Dow rose 0.45 percent,the S&P 500 gained 0.55 percent and the Nasdaq climbed 0.20 percent.
Thursday’s delay in Washington sent the yen higher in Asian trade. The dollar bought 84.20 yen against 84.38 yen in New York late Thursday. The euro was at $1.3195 and 111.06 yen compared with $1.3241 and 111.72 yen.