July 25 - Asian stocks fall while gold hits a record high Monday as investors move to protect their portfolios amid fading hopes for a political deal to avert a U.S. default. Toshi Maeda reports.
Asian stocks fell on Monday (July 25) as hopes for a political deal to avert a U.S. debt default begin to fade. The U.S. government's failure to reach an agreement on the debt ceiling has made Asian markets nervous. The uncertainty even prompted a response from U.S. Secretary of State Hillary Clinton, who's visiting Hong Kong. (SOUNDBITE) (English) UNITED STATES SECRETARY OF STATE HILLARY CLINTON, SAYING: "Let me assure you, we understand the stakes. We understand how important this is to us, and how important it is to you. The political wrangling in Washington is intense right now but these debates have been a constant in our political life throughout the history of our republic." Investors none-the-less moved to protect their portfolios sending gold to an all-time high, with industrials and commodity-related stocks underperforming the most. Japan's Nikkei average snapped a three-day run of gains and ended the day down nearly 1 percent. The Asia-Pacific equity index outside Japan was also down about 1 percent, . Fidelity International's Catherine Yeung says with financial instability in the U.S. and Europe now the biggest risk for Asian equities, fund managers are turning increasingly to Asia's domestic sectors. (SOUNDBITE)(English) FIDELITY INTERNATIONAL'S INVESTMENT DIRECTOR CATHERINE YEUNG SAYING: "External risks, such as issues we are seeing in the U.S., as well as in Europe, for us, continue to be the biggest risk for Asian equity markets. Now, authorities across Asia are indeed trying to change the make of their GDP growth, so being less reliant on external demand or developed market demand and focusing more on domestic spending. As such, when you look at the portfolio managers, generally speaking in Asia ex Japan, they have more of a bias toward domestic spending or domestic growth stories versus exporters." The Japanese yen surged to a near four-month high against the dollar, sending shares of major Japanese exporters, such as Toyota and Sony, lower. South Korea's KOSPI index was also down 1 percent on U.S. debt ceiling worries. Toshi Maeda, Reuters.