By Robb M. Stewart
MELBOURNE, Australia--Australian shares dipped in early trading
on Friday as the partial shutdown of the U.S. government drags on
and a deadline to raise its borrowing limit approaches.
The tone of the local market was set overnight with broad falls
by stocks on Wall Street--both the S&P 500 and Dow Jones
Industrial Average fell 0.9%. Investors are frustrated politicians
in Washington are no closer to resolving their deadlock.
The impact of the U.S. shutdown is likely to be limited for
Australia--with more than 80% of its exports destined for
Asia--provided a resolution can be reached before too long. Of more
concern is the debt ceiling. It needs to be raised if a default of
debt payments by the U.S. government is to be avoided.
"This has the potential to be far more catastrophic for the U.S.
economy, markets and the global economy," Robert Henderson, chief
economist at National Australia Bank, said in a research report.
"Developments on that front need careful monitoring over the next
couple of weeks."
At 0140, the S&P/ASX 200 was down 0.5% at 5207.4 with broad
losses led by a decline in minifying stocks.
The market is set to break a run of seven weekly gains that led
to its biggest quarterly rise in four years for the third quarter.
The broader All Ordinaries index rose 1.8% in September although it
underperformed other large markets including Japan, Hong Kong and
Singapore, monthly figures released by exchange operator ASX
showed.
"Heading into the weekend we doubt local investors will be keen
to hold onto gains given the significant risk from the U.S.
political deadlock," said Stan Shamu, a market strategist at IG in
Melbourne.
BHP Billiton was 1.5% lower while Rio Tinto let go of 0.8% and
iron-ore producer Fortescue was down 1.1%.
Big banks weaker, too, with ANZ, Commonwealth Bank, National
Australia Bank and Westpac down between 0.2% and 0.8%.
Construction company Leighton Holdings dropped 3% building on
the previous day's sharp fall.
Write to Robb M. Stewart at robb.stewart@wsj.com
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