By Dominic Lau
TOKYO Oct 7 Asian markets look set for a
cautious start to the week on Monday, with U.S. stock futures
and the dollar coming under pressure as politicians in
Washington showed no signs of making progress over the weekend
in resolving the U.S. budget standoff.
Democrats and Republicans remained far apart in ending the
first government shutdown in 17 years, let alone reaching a deal
on the U.S. borrowing limit by Oct. 17 to avoid an unprecedented
Republican House Speaker John Boehner vowed on Sunday not to
raise the U.S. debt ceiling without a "serious conversation"
about what is driving the debt, while Democrats said it was
irresponsible and reckless to raise the possibility of a
The comments appeared to mark a hardening stance since late
last week when Boehner was reported to have told Republicans
privately that he would work to avoid default, even if it meant
relying on the votes of Democrats, as he did in August 2011.
The U.S. Standard & Poor's 500 e-mini futures shed
0.5 percent in early Asian trade on Monday. The S&P 500 index
ended down 0.1 percent last week.
U.S. Treasury futures added 5-1/2 ticks.
Selling in risky assets has been orderly so far, but
investors see volatility rising if the shutdown continues as the
Oct 17 deadline gets closer.
"As the days tick by and the U.S. government's cash
gradually starts to run out, the stakes will rise considerably,"
analysts at ANZ said in a note.
Asian shares were likely to face another testing week after
Japan's Nikkei share average tumbled 5 percent last week
to mark its worst weekly decline since early August.
Australia's S&P/ASX 200 index was flat in a
tentative start to the session.
"A higher risk of a U.S. sovereign default would lead to a
flight to liquidity and, ironically, a stronger U.S. dollar,
except against the most liquid/safest-haven ones: euro, yen,
sterling and Swiss franc," analysts at Barclays Capitals wrote
in a note.
"That is not to say we expect a breach of the ceiling, and
continue to expect that a resolution will be found, despite the
The dollar slipped 0.3 percent to 97.18 yen, giving
up its gains on Friday to snap a five-day losing run against the
The greenback was down 0.1 percent against the euro
at $1.3571. Against a basket of major currencies, the dollar
eased 0.1 percent, within striking distance of an
eight-month trough hit last week.
Safe-haven gold inched up 0.3 percent to about $1,314
Brent crude eased 0.3 percent to around $109.10 a
barrel after gaining 0.8 percent last week to end a three-week