World markets decline on debt impasse

July 25, 2011: 7:41 AM ET
Washington's failure to agree on raising the debt ceiling faces a global market reaction.

NEW YORK (CNNMoney) -- Stocks around the world fell Monday, as markets reacted to news that congressional leaders and the Obama administration failed to reach agreement on a deal to raise the U.S. debt limit.

Tokyo's Nikkei 225 closed lower 0.8% at 10,050. In Hong Kong, the Hang Seng index lost 0.7%.

The Shanghai Composite index dropped a full 3%. Contributing to the loss was a decline in railway-related stocks after a bullet train collision over the weekend killed at least 38 people.

In Sydney, the Australian Stock Exchange's All Ordinaries index was off 1.5%.

European markets fared better Monday morning. Even after Moody's announced another downgrade to Greece's debt, indexes declined -- but not as much as some analysts had feared. (Check the latest in world markets)

Meanwhile, trading in U.S. stock futures -- which indicates the likely direction when actual stock trading begin Monday morning -- were lower. S&P 500 (SPX), Nasdaq composite (COMP) and Dow Jones industrial average (INDU) futures were down a little less than 1%.

President Obama and congressional Republicans have been at odds for weeks over a debt-reduction plan, that some lawmakers demanded in response for raising the debt ceiling.

After negotiations between House Speaker John Boehner and Obama fell apart late Friday, lawmakers set a Sunday deadline find a resolution before Asian markets opened for trading.

While lawmakers failed to meet the deadline, market losses were moderate as investors maintained faith that a deal will be reached soon.

Geithner: 'We're almost out of runway'

The United States hit the debt ceiling in May. Treasury Secretary Tim Geithner has said that by Aug. 2 he will no longer have enough cash to pay all the country's bills on time.

Legislative leaders on Capitol Hill spent the weekend in talks trying to strike a deal, but made no progress as each side decided to pursue a separate plan.

-- The CNN Wire contributed to this report  To top of page

Index Last Change % Change
Dow 17,928.20 -142.20 -0.79%
Nasdaq 4,939.33 -77.60 -1.55%
S&P 500 2,089.46 -25.03 -1.18%
Treasuries 2.18 0.04 1.92%
Data as of 7:36am ET
Company Price Change % Change
Bank of America Corp... 16.35 -0.09 -0.55%
Microsoft Corp 47.60 -0.64 -1.33%
Apple Inc 125.80 -2.90 -2.25%
Ford Motor Co 15.53 -0.25 -1.58%
AT&T Inc 33.72 -0.81 -2.35%
Data as of May 5
Overnight Avg Rate Latest Change Last Week
30 yr fixed3.89%3.81%
15 yr fixed3.05%2.97%
5/1 ARM3.08%3.04%
30 yr refi3.95%3.88%
15 yr refi3.15%3.06%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates: