By Robb M. Stewart
MELBOURNE, Australia--Australian equities were sharply lower
Monday as markets across the region braced for a partial shutdown
of the U.S. government.
Sentiment was further dampened by weaker-than-expected
industrial production data out of Japan, which added further weight
on resources shares. Gold stocks were among the few gainers in
early trading, bolstered by a rise in the spot bullion price to its
highest since Sept. 20 amid growing concerns over the deadlock in
Washington.
"While a partial government shutdown can theoretically be
averted up until tomorrow afternoon, this is now looking unlikely,"
said Ric Spooner, chief market analyst at CMC Markets in Sydney.
"The immediate impact for markets will be increased
uncertainty."
At 0130 GMT, the S&P/ASX 200 was 1.2% lower at 5241.7, with
broadbased declines led by energy, mining and financial stocks.
The benchmark index ended at a fresh five-year high on Friday.
The ASX has logged seven consecutive weekly gains and is set for
its biggest quarterly rise since the third quarter of 2009, said
Evan Lucas, a market strategist at IG in Melbourne.
Mr. Lucas said markets would respond violently to news of a U.S.
shutdown, eroding investor optimism that has been building. "Trade
is going to shift quickly and sporadically," he said.
Time is running out for Congress in the U.S. to pass a budget
and avoid the first federal closure since 1996, something leaders
of both parties have said they want to avoid. The risk of a
shutdown comes at a time when many economists expect the Federal
Reserve to begin tapering economic stimulus some time in the next
six months.
Australia's largest mining companies were trading lower, with
BHP Billiton down 1.2% and Rio Tinto 1.8% lower.
The big banks also were weaker, with ANZ, Commonwealth Bank,
National Australia Bank and Westpac down between 1.4% and 1.5%.
Supported by a stronger gold price, Newcrest Mining was up 2%,
AngloGold Ashanti was up 3.5% and Resolute Mining was up 3.6%.
OZ Minerals, meanwhile, pared some of its earlier gains on the
back of a media report that Glencore Xstrata had acquired a stake
in the company. It was trading 3.4% higher after issuing a
statement to say it hadn't been approached by Glencore with any
proposal.
Write to Robb M. Stewart at robb.stewart@wsj.com
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