Local markets unruffled by US shutdown

(MENAFN- Arab News) The standoff between Democrats and Republicans in the Congress, which led to the partial shutdown of the US government, persisted with no sign of a breakthrough Tuesday. Stock markets around the world, however, reacted resiliently, with analysts saying significant damage to the US economy was unlikely unless the shutdown lasted for more than a few days. The Tadawul All-Share Index (TASI) rose 0.55 percent to 8,008.54 points on Tuesday. John Sfakianakis, chief investment strategist at Masic, told Arab News: "The US shutdown and its impact on global markets, commodities and the dollar hinges on its duration. A shutdown that lasts longer than a week will begin to have an impact on US growth, which could affect valuations and market risks." He said: "Each week the US government shutdown could shave about 0.10-0.12 percent off the quarterly growth rate of real GDP. There may be additional impact through confidence and consumer spending, though in the last shutdown in 1995-1996, these appear to have been minimal." He said if the shutdown was for a brief period, then volatility and uncertainty will have a temporary effect. Oil prices have been falling over the last few sessions irrespective of the US shutdown and downside risks exist as the shutdown continues. \"At this point, it's quite early to expect any negative consequences on the positive direction of the Saudi economy due to the shutdown, but if the shutdown runs longer and its effect is globalized, the local economy will surely not remain immune." The shutdown also had an impact on exchange rates. The rate of the Indian rupee against the riyal declined due to a fall in the value of the dollar. The Indian rupee, which was fetching Rs.16.55 earlier for one riyal, stood at Rs. 16.36 on Tuesday after the shutdown news broke.