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 17,730.11 -27.80 -0.16%
Nasdaq 5,009.21 -3.91 -0.08%
S&P 500 2,076.78 -0.64 -0.03%
Treasuries 2.39 -0.02 -1.03%
Data as of 3:11am ET
Company Price Change % Change
Bank of America Corp... 17.03 -0.19 -1.10%
Apple Inc 126.44 -0.16 -0.13%
Intel Corp 30.56 0.38 1.24%
Micron Technology In... 19.07 0.29 1.54%
General Electric Co 26.78 0.12 0.45%
Data as of Jul 2
Overnight Avg Rate Latest Change Last Week
30 yr fixed4.22%4.27%
15 yr fixed3.19%3.24%
5/1 ARM3.30%3.33%
30 yr refi4.23%4.29%
15 yr refi3.21%3.27%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates: