BANGKOK (AP) — Uncertainty over whether Washington will be able to work out a spending and taxation deal that is crucial to keeping the U.S. economic recovery on track caused Asian stock markets to stall Monday.
Economists have said the U.S. risks slipping into recession if hundreds of billions of dollars in expiring tax cuts and automatic spending reductions take effect on Jan. 1 — the so called "fiscal cliff." Congress and the White House must find a compromise to prevent a big hit to the world's biggest economy.
President Barack Obama, fresh from a re-election victory, and House Speaker John Boehner have spoken of compromise but appear to be taking firm stances on some issues, including whether to raise taxes for the wealthiest Americans.
"Despite comments from the US administration and Congressional leaders of a willingness to compromise, markets remain unconvinced," analysts at Credit Agricole CIB in Hong Kong said in a market commentary.
Japan's Nikkei 225 index fell 0.6 percent to 8,704.21, with growth figures showing the economy contracted an annualized 3.5 percent for the quarter ending September. Most economists forecast a further decline in economic activity for the October-December quarter, which would officially put the world's No. 3 economy in recession, according to the common definition of two consecutive quarters of contraction.
South Korea's Kospi fell 0.2 percent to 1,900.27 and Australia's S&P/ASX 200 lost 0.2 percent to 4,453.40. Benchmarks in Singapore, Taiwan and Indonesia fell. The Philippines and New Zealand rose.
Hong Kong and mainland Chinese stock markets rose following comments over the weekend by Chinese Cabinet officials that the country's economic slowdown has ended, although the economy is not ready to stage a recovery, and that exporters still face tough conditions.
Hong Kong's Hang Seng added 0.2 percent to 21,421.44. The Shanghai Composite Index gained 0.1 percent to 2,071.80 and the smaller Shenzhen Composite Index added 0.4 percent to 831.58.