Most Asian markets rise on hopes for Bill to avert US shutdown

Global Markets Plagued by Uncertainty Amid Fears of Inflation and Recession

The global economy is currently navigating a period of significant uncertainty, with markets around the world experiencing volatility due to growing concerns about an escalating trade war between major economies. Investors are increasingly worried that this trade conflict could reignite inflation and potentially lead to a recession, particularly in the United States. The fears have been further compounded by the unpredictable nature of global economic relations, leaving many market participants on edge. The situation has been exacerbated by recent developments in U.S. markets, where the S&P 500 dipped into correction territory, falling over 10% from its recent peak. This decline has raised alarms among investors, who are now bracing themselves for potential further losses.

Wall Street Sees Significant Declines as Investors Seek Safe Havens

The turmoil in the markets has been particularly evident on Wall Street, where the S&P 500 slipped into a correction on Thursday, marking a significant downturn from its record high just last month. This decline has been a cause for concern among investors, who are now looking for safer assets to park their funds. Gold, often considered a safe haven during times of economic uncertainty, has seen a surge in demand. On Friday, gold prices reached a record high of $2,990.21, reflecting the rush of investors seeking refuge from the volatility. The precious metal’s price increase underscores the level of anxiety in the markets, as investors increasingly fear that the ongoing trade tensions could lead to broader economic instability.

Asian Markets Show Resilience Amid Hopes of Government Shutdown Resolution

Despite the challenges faced by global markets, Asian markets managed to post a broadly positive performance on Friday. The optimism was fueled by hopes that the U.S. Congress would pass a bill to avoid a government shutdown. With just hours left before the deadline to push through the Republican spending bill, Senate Democratic leader Chuck Schumer dropped his threat to block the legislation. This move raised expectations that a shutdown could be averted, providing some relief to markets. However, the passage of the bill is not without its challenges, as Democrats have faced pressure from their grassroots supporters to oppose the proposal, which they argue contains harmful spending cuts that could have long-term consequences.

Schumer Warns of Potential Consequences of Government Shutdown

Schumer has been vocal about the potential dangers of a government shutdown, warning that it could give President Donald Trump and Elon Musk, who heads the Department of Government Efficiency (DOGE), unchecked power to dismantle vital government services. Schumer argued that a shutdown would allow Trump and Musk to accelerate the gutting of key government departments, with little oversight from agencies that would otherwise provide checks and balances. His comments highlight the political tensions surrounding the spending bill and the broader concerns about the impact of a shutdown on the U.S. economy and government operations.

Mixed Performance in Asian Markets as Trade Tensions Persist

The Asian markets showed a mixed performance, with some indices posting gains while others experienced losses. Hong Kong’s market rose by more than 1% on Friday, recovering some of the losses it had incurred earlier in the week. However, not all companies in the region fared well. CK Hutchison Holdings, a major conglomerate owned by tycoon Li Ka-shing, saw its stock price drop by 7% after Chinese officials in Hong Kong criticized the company over the sale of a controlling stake in Panama ports. The sale, which was reportedly made under pressure from Trump, had previously led to a 25% surge in the company’s stock price earlier this month. Meanwhile, other markets such as Shanghai, Tokyo, Wellington, and Manila also saw gains, while Singapore, Seoul, Taipei, and Jakarta experienced declines.

Analysts Warn of Economic Impact of Government Shutdown and Trade Tensions

Analysts have warned that a U.S. government shutdown, coupled with existing trade tensions, could have severe consequences for the economy and markets. Chris Beauchamp, chief market analyst at IG, noted that the 2018-2019 government shutdown resulted in an estimated $11 billion loss to the U.S. economy, with $3 billion of that loss being permanent. He emphasized that current market participants are factoring in the potential for similar damage if lawmakers fail to reach an agreement. Beauchamp also highlighted that a government shutdown, combined with ongoing trade tensions and tariffs, could exacerbate market volatility. Investors are already concerned about the economic impact of the tariffs, which have contributed to recent declines in major stock indices.

In addition to the domestic challenges, international developments are also being closely monitored. Russian President Vladimir Putin has expressed "serious questions" about Washington’s plan for a 30-day ceasefire in Ukraine, though he indicated willingness to discuss the matter with his American counterpart. This adds another layer of unpredictability to an already volatile global landscape, as geopolitical tensions continue to influence market sentiment. As the situation continues to unfold, investors will be closely watching for any signs of resolution or further escalation in these various fronts.