ALBAWABA – Asian markets fell hard on Wednesday, in the wake of hardline Republican threats to vote down the US debt ceiling deal, which is promised to pass the United States (US) Congress before June 5, Agence France-Presse (AFP) reported.
Other markets in Europe and the US itself also stumbled on the slew of statements by Republicans against the debt ceiling deal.
Congress must pass the bill on raising the US debt ceiling by June 4, in order to avoid defaulting on debt payments and bills, which is when the Treasury Department said the US would run out of cash.
President Joe Biden and House of Representatives Speaker Kevin finalised an initial US debt ceiling deal Saturday evening, and they both reaffirmed that defaulting was off the table.
Even though McCarthy has described the deal as "transformational" and expressed confidence the bill will pass, leading Freedom Caucus member Chip Roy called it a "turd sandwich".
"Not one Republican should vote for this deal. It is a bad deal. No one sent us here to borrow an additional $4 trillion to get absolutely nothing in return," Roy said at a Freedom Caucus news conference.
He later warned McCarthy would face a "reckoning.”
Meanwhile, Republican Representative Dan Bishop called party members to vote McCarthy out as speaker, according to AFP.
Still, House Democratic leader Hakeem Jeffries remained confident, telling Bloomberg Television Tuesday: "We will be able to get this bill over the finish line tomorrow."
Politicians and lawmakers on both the Democratic and Republican ends of the US political spectrum raised concerns about the deal.
Republicans have voiced objections over there being not enough spending cuts, and AFP reported that far-left Democrats are not happy that US President Joe Biden agreed to limit spending in the first place.
On the other hand, concerns over another interest rate hike by the Federal Reserve Board (the Fed) also weighed on markets worldwide.
But with the House vote due later Wednesday, nervous investors were shifting out of risk assets, sending Asian markets into the red, AFP reported.
Tokyo, Sydney, Seoul, Singapore, Taipei, Wellington, Manila and Jakarta all suffered big losses in the wake of the Republican bash on the US debt ceiling deal.
Inflation data still posting high in the US also ramped up expectations of a Fed rate hike in June, after over a year of consecutive hikes.
In fact, there are ongoing concerns that the Fed may raise rates up to 6 or 6.5 percent.
"More likely than not the Fed will continue to tighten and that is going to lead to a recession," Shana Sissel, at Banrion Capital Management, told AFP.
Recession worries also contributed to the slide in Asian markets, as news reported US consumer confidence hit a six-month low in May, according to AFP.
Key market figures as reported by AFP:
Tokyo - Nikkei 225: DOWN 1.1 percent at 30,976.54 (break)
Hong Kong - Hang Seng Index: DOWN 2.1 percent at 18,213.63
Shanghai - Composite: DOWN 0.6 percent at 3,205.39
Euro/dollar: DOWN at $1.0708 from $1.0739 on Tuesday
Dollar/yen: UP at 139.83 yen from 139.80 yen
Pound/dollar: DOWN at $1.2393 from $1.2404
Euro/pound: DOWN at 86.41 pence from 86.48 pence
West Texas Intermediate: DOWN 0.2 percent at $69.30 per barrel
Brent North Sea crude: DOWN 0.2 percent at $73.41 per barrel
New York - Dow: DOWN 0.2 percent at 33,042.78 (close)
London - FTSE 100: DOWN 1.4 percent at 7,522.07 (close)
