HONG KONG - Markets struggled on Tuesday as traders tracked developments in Washington, where US President Joe Biden and House Speaker Kevin McCarthy said they held productive talks on the debt ceiling but had still not reached a deal to avert a calamitous default.
With just weeks to go before the United States runs out of cash, the standoff has become the key topic on trading floors on fears that a US failure to pay its bills will send shockwaves through markets and the global economy.
After their latest get-together on Monday, the Republican Speaker said: "I felt we had a productive discussion. We don't have an agreement yet, but I did feel the discussion was productive in areas (where) we have differences of opinion."
He added that negotiators would "work through the night" to move the sides closer and that he and Biden would "talk every day to try to find a way to get this done".
After a mixed start to the week on Wall Street, Asia opened higher but was unable to maintain momentum.
Tokyo, Hong Kong, Shanghai, Wellington, Manila and Bangkok fell, though Singapore, Seoul, Taipei, Mumbai and Jakarta edged up.
London, Paris and Frankfurt all fell at the open.
The Fed was also in focus ahead of next month's policy meeting, with discussion revolving around whether it will lift rates again or stand pat for the first time since starting its hiking campaign more than a year ago.