BANGKOK (AP) — A weaker-than-expected U.S. manufacturing report sent Asian stock markets down Tuesday.
U.S. manufacturing shrank in November to its weakest level since July 2009. The Institute for Supply Management said Monday that its index of manufacturing conditions fell 49.5 from October's 51.7. Numbers above 50 signal growth, while those below indicate contraction.
One reason for the downturn, the trade group said, was that businesses are concerned about the so-called fiscal cliff, which is a package of tax increases and government spending cuts that will take effect in 2013 unless lawmakers take action. Worries about automatic tax increases cut demand for factory orders and manufacturing jobs.
President Barack Obama and Republican lawmakers have yet to work out a budget deal as the clock continues ticking toward the year-end deadline.
Ric Spooner, chief market analyst at CMC Markets in Sydney, said that while most analysts think U.S. political leaders will negotiate some kind of deal before the deadline, there will still be some degree of tax increases and spending cuts that will impinge on the growth of the world's No. 1 economy.
"It's important to remember that there will still be a significant fiscal drag on the U.S. economy next year. So I think markets have arrived at a level that reflects that state of affairs, or close to it," Spooner said. "The market has arrived around a level which reflects the risk that is still out there."
Japan's Nikkei 225 index fell 0.2 percent to 9,441.75. Hong Kong's Hang Seng lost 0.2 percent to 21,728.80. South Korea's Kospi fell 0.5 percent to 1,930.68.
Australia's S&P/ASX 200 shed 0.5 percent to 4,510.30 after the Reserve Bank of Australia, as expected, cut its benchmark interest rate by a quarter of a percentage point to 3 percent, its lowest level since the global financial crisis.