REPUBLICANS and Democrats have begun work on different budget plans in an increasingly frantic search for a deal to raise the federal debt ceiling, as both sides acknowledge that failure to agree could rock the global financial markets. Both the Republican congressional leadership and the White House said the rapid agreement was needed to prevent a potential loss of confidence in US assets, but continued to push their own solutions.
TEHRAN and Beijing are in talks about using a barter system to exchange Iranian oil for Chinese goods and services, as US financial sanctions have blocked China from paying at least $20bn for oil exports. The US sanctions against Iran, which make it difficult to conduct dollar denominated business, mean China might owe the oil rich nation as much as $30bn.
ASIAN stocks fell, led by banks and exporters, as the problems in the US continue. The MSCI Asia Pacific Index lost 1% in Tokyo. About seven stocks fell for every two that gained on the gauge.
THE FTSE 100 is seen to open lower this morning following declines overnight in Asia. The UK blue chip index looks set to shed 40-45 points, according to financial bookmakers, having ended up 35.13 points, or 0.6% at 5,935.02 on Friday, on relief triggered by the EU deal on a second Greek bailout.
THE DOLLAR slid to a record low against the Swiss franc after US lawmakers failed to agree on raising the nation’s $14.3 trillion debt ceiling. The franc and yen rose against all of their major peers as Republicans prepared to force action on a shorter term extension of the debt limit.
OIL declined for the first time in five days on concern that a failure to reach a deal on the US debt limit may cause the nation to default, threatening the economy of the world’s biggest crude consumer. Futures slipped as much as 1.1% after House Speaker John Boehner told Republicans that there’s no agreement on a plan for increasing the ceiling before a default threatened for August the 2nd.
GOLD surged to a record as US lawmakers failed to reach an agreement on raising the federal debt limit, boosting haven demand. Gold for August delivery in New York advanced to $1,624.30, the highest ever. Whilst gold gained, copper and grains declined. Copper lost 0.4% on the London Metal Exchange and Corn for December delivery dropped by 2% whilst soybeans and September wheat fell 0.9% and 1.1% respectively.