Asian shares were quiet on Wednesday, and the dollar stayed near a five-week top as investors remained risk wary amid U.S. debt ceiling talks and mixed economic data.

MSCI’s broadest Asia-Pacific share index outside Japan, MIAPJ0000PUS, fell 0.20%, while Australia’s S&P/ASX 200 index, AXJO, fell 0.56%. China data showing a shaky post-COVID rebound drove the Shanghai Composite Index (.SSEC) and Hong Kong’s Hang Seng Index (.HSI) down 0.4%.
Japan’s Nikkei (.N225) rose 0.68%, surpassing 30,000 for the first time since September 2021.

President Joe Biden and top House Republican Kevin McCarthy moved closer to a debt default solution Tuesday.

After an hour of talks, McCarthy, the House speaker, informed reporters the two sides were far apart on lifting the debt ceiling.
“It is possible to get a deal by the end of the week,” he remarked. “Compromise is easy.”

Without a resolution, the government may be unable to pay its debts in two weeks, and economists anticipate a recession.

Nuveen chief investment officer Saira Malik said, “One thing investors can be certain of is that more uncertainty lies ahead” as the deadline approaches. Malik anticipates equity and fixed-income markets to remain volatile until negotiations conclude.

“The most likely scenario is a resolution, perhaps at the eleventh hour, enabling the federal government to meet its obligations.”

Home Depot’s gloomy prediction and April retail sales data showed lower consumer spending, dragging down U.S. market indices overnight.
ING economists said U.S. retail sales are the macro focus. “These actually came in on the lower end of expectations though the news was mixed, with lower headline but higher core sales figures muddying the message.”

The U.S. economy has slowed after several Fed rate hikes to combat excessive inflation. As a result, according to CME FedWatch, markets expect the Fed to drop rates later this year, although some Fed officials remain hawkish.

Atlanta Fed president Raphael Bostic said the Fed must continue “super strong” in combating inflation even if the unemployment rate rises later in the year. In contrast, Chicago Fed president Austan Goolsbee said it was premature to contemplate interest rate decreases.

The dollar index, which tracks the dollar against six rivals, climbed 0.01% to 102.61, nearing Monday’s five-week high of 102.75.

Sterling fell 0.04% to $1.248, while the yen fell 0.05% to 136.47 per dollar.

A surprise jump in U.S. crude stocks exacerbated demand fears after weaker-than-expected economic statistics from the world’s two major oil customers, the U.S. and China.

After falling below $2,000 an ounce, gold prices stabilized. Spot gold was $1,991.49 per ounce.