Asian Stocks Down as Investors Digest U.S. Debt Ceiling Drama By

By Gina Lee

Investing.com – Asia Pacific stocks were mostly down on Wednesday morning after their U.S. equivalents recorded their worst day since May 2021 and bond yields climbed on concerns about inflation.

Japan’s tumbled 2.55% by 10:27 PM ET (2:27 AM GMT), with the incumbent Liberal Democratic Party to elect a leader, who could become the country’s next prime minister, on Wednesday.

South Korea’s slid 1.91% and in Australia, the fell 1.32%.

Hong Kong’s rose 1.20%.

China’s fell 1.06% and the slid 1.16%, with the , and purchasing managers indexes due on Thursday.

Meanwhile, China Evergrande Group (HK:) faces its latest bond interest payment interest on Wednesday, with no signs that it has cleared an earlier payment that was due during the previous week.

In Washington D.C, concerns are mounting about a debt-ceiling impasse after Republicans in the Senate blocked a Democrat move to raise the debt limit.

In their testimonies before a Senate Banking Committee hearing, both U.S. Federal Reserve Chairman Jerome Powell and U.S. Treasury Secretary Janet Yellen warned that a default due to a failure to raise the debt ceiling would have catastrophic consequences. The pair will also testify before a House Banking Committee hearing on Thursday.

The closed 2% lower, the most since May 2021, and the fell the most since March 2021. The benchmark also and the yield on the 30-year note earlier jumped almost 10 basis points.

The developments in Washington come as energy costs are soaring due to a power crunch in China and the Fed is likely to begin asset tapering soon.

“What we got here is a stock market that finally looks vulnerable as Treasury yields surge, oil prices look like they could easily hit $90 a barrel, and as supply chain issues show no signs of easing,” OANDA senior market analyst Edward Moya told Bloomberg.

“There is a lot of drama happening on Wall Street and most of it has to do with a reset of inflation expectations.”

Meanwhile, central bank chiefs, including the Bank of England’s Andrew Bailey, the Bank of Japan’s Haruhiko Kuroda, the European Central Bank (ECB)’s Christine Lagarde, and Powell will participate in an ECB Forum panel later in the day.

On the data front, the U.S. was at 109.3 in September, a third consecutive month of falls.