Financial markets in Asia and Europe have been rocked over concerns that the United States’ government might be heading for a partial shutdown.
Washington should agree to a new spending bill before the end of the financial year at midnight on Monday amid political divisions that have created a stalemate.
If the American lawmakers fail to agree on the budget deal, essential federal services could be shut down and hundreds of thousands of staff placed on unpaid leave.
The worries over the issue have caused stock indexes in Japan, Hong Kong, Australia and South Korea to decline.
Shares in the Asian economic powerhouse Japan closed down more than 2 percent while South Korea stocks shed 0.6 percent.
Australia’s main index also saw a drop of 1.4 percent from five-year highs, their biggest one-day fall since early August.
Across Europe, major markets in the UK, France and Germany also faced considerable falls.
“It is the fear of the unknown,” said David Kuo of financial website The Motley Fool, adding, “No one knows what is really going to happen and markets don’t like uncertainty.”
Kuo further said the US government spending is likely to face some reduction, “but we don’t know what areas are going to be affected.”
Meanwhile, the possible shutdown is not the only crisis Washington is facing as the US administration and Republicans are also fighting over extending the government’s borrowing limit.
The US Treasury Secretary has warned that the country will reach its debt ceiling by 17 October. The move leaves the US government with half the money it requires to pay its bills.
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