By Yoshiaki Nohara and Emma O’Brien
Oct. 4 (Bloomberg) -- Asian stocks fell, with the regional benchmark index heading for its first weekly loss in more than a month, as concern grew that the U.S. political impasse could lead to a recession in the world’s biggest economy.
Rinnai Corp., a Japanese maker of gas appliances, slid 4.2 percent after its rating was cut at Deutsche Bank AG. Samsung Electronics Co. gained 0.9 percent in Seoul after the world’s biggest maker of smartphones posted third-quarter profit that beat estimates. SoftBank Corp., a Japanese mobile phone operator, dropped 2.3 percent after rising 11 percent over the past three days.
The MSCI Asia Pacific Index lost 0.4 percent to 138.96 as of 9:26 a.m. in Tokyo, with all 10 industry groups on the gauge falling. Japan’s Topix index dropped 0.8 percent as the Bank of Japan wraps up a two-day meeting, which economists surveyed by Bloomberg forecast will result in no change in policy.
“Creeping worries about the U.S. debt ceiling are starting to unnerve investors,” Mike Jones, a currency strategist at Bank of New Zealand Ltd. in Wellington, wrote in an e-mail to clients. “Expect more whippy and nervous trading.”
The Asia-Pacific gauge is set for a 1.3 percent drop this week as the failure of U.S. lawmakers to avert a government shutdown fueled concern they won’t be able to agree on raising the nation’s $16.7 trillion debt limit later this month. The Treasury Department warned that a federal default could lead to a recession as bad as the 2008 financial crisis or worse.
South Korea’s Kospi index added 0.1 percent as it reopened after a holiday. New Zealand’s NZX 50 Index dropped 0.3 percent and Australia’s S&P/ASX 200 Index lost 0.5 percent. Trading in Hong Kong is yet to open and China’s markets are closed for holidays until Oct. 8. The MSCI Asia Pacific Index advanced 7.8 percent this year through yesterday, pushing valuations on the regional gauge to 13.5 times estimated earnings, according to data compiled by Bloomberg. That compares with 15.1 for the Standard & Poor’s 500 Index and 14.1 for the Stoxx Europe 600 Index, the data show.
Futures on the S&P 500 were little changed today. The gauge declined 0.9 percent yesterday, the most in a month, as Treasury said the government will run out of borrowing authority Oct. 17, leaving only cash to pay the bills.
“Not only might the economic consequences of default be profound, those consequences, including high interest rates, reduced investment, higher debt payments and slow economic growth could last for more than a generation,” the Treasury said in its report.
“In the event that a debt limit impasse were to lead to a default, it could have a catastrophic effect on not just financial markets but also on job creation, consumer spending and economic growth -- with many private-sector analysts believing that it would lead to events of the magnitude of late 2008 or worse, and the result then was a recession more severe than any seen since the Great Depression,” the department said.
Another report yesterday showed fewer Americans than forecast filed applications for unemployment benefits last week. Jobless claims rose to 308,000 in the week ended Sept. 28, from a revised 307,000, the Labor Department said. The median forecast of 50 economists surveyed by Bloomberg called for an increase to 315,000.
U.S. payrolls data won’t be released as scheduled today because of the shutdown. The department said that an alternative date for the September payrolls report and jobless rate hasn’t been scheduled.
Futures on Hong Kong’s Hang Seng Index lost 0.2 percent in their most recent trading session, while contracts on the Hang Seng China Enterprises Index dropped 0.4 percent. The Bloomberg China-US Equity Index of the most-traded Chinese stocks in New York added 0.4 percent, rising for a third day.