Share prices on Wall Street and European stock markets fell on Monday amid a looming US government shutdown and a political crisis in Italy.
In a high-volume trading session on US exchanges, the blue-chip Dow Jones Industrial Average fell 0.8 per cent to 15,129.67. The broad-based Standard & Poor’s 500 Index closed down 0.6 per cent to 1,681.55. All 10 industries in the S&P 500 were lower.
Crude oil hit a three-month low.
Earlier, Germany’s DAX index closed down 0.77 per cent, while the eurozone’s Eurostoxx 50 was down 0.83 per cent.
The sell-offs come amid a US Government shutdown beginning Tuesday unless the Senate and House of Representatives can strike a last-minute deal on a temporary budget.
A political crisis in Italy, sparked by former prime minister Silvio Berlusconi’s threat to bring down the grand coalition Government, has added to the uncertainty roiling global markets.
Italian stocks fell around 2 per cent, and trading of several shares were halted on the Milan stock market after steep drops activated automatic suspensions.
The spread between Italian and German 10-year bonds, considered a benchmark risk indicator, widened to almost 300 basis points at one point — the highest level in months — after closing at 264 on Friday.
Asian stock markets showed similar investor unease.
In Japan, the benchmark Nikkei 225 Stock Average lost 2.06 per cent, while the broader-based Topix index was down 1.92 per cent.
Japanese manufacturers are particularly exposed to fluctuations in the United States, a key export market. Additionally, they were hit by a rise in the yen, which makes Japanese exports less competitive overseas and erodes repatriated earnings.
The Stock Exchange of Thailand (SET) index ended down 2.4 per cent.
“The fall was due to regional jitters over the looming US Government shutdown,” Asia Plus Securities analyst Therdsak Thaweethiratham said. “It has nothing to do with local factors.” Indices fell by more than 2 per cent each in Indonesia, the Philippines and Pakistan.
In Australia, the S&P/ASX 200 Index fell 1.7 per cent Monday, and the Hang Seng Index in Hong Kong was down 1.5 per cent.
Some Asian markets bucked the trend, with the Shanghai Shenzhen CSI 300 Index showing a rise of 0.59 per cent and a positive showing in the communist economies of Vietnam and Laos.
Overall, the S&P Asia 50 CME Index, which tracks large listed companies in Hong Kong, South Korea, Singapore, and Taiwan, was up 0.36 per cent.