“I think it’s probably very frustrating for investors sitting in Johannesburg, Lagos or Mumbai looking at their screens and thinking – we’re completely being held hostage by this political point scoring,” David Dolan, a senior correspondent at Reuters, told CNBC Africa.
“The backdrop to this is Obamacare, which went into law yesterday. The Republicans – they’re very fiscally conservative. They see Obamacare as overextending the power of government and that’s why they’re against it.”
President Barack Obama and congressional Republicans came no closer to ending a standoff that forced the first government shutdown in 17 years. The standoff has raised questions about United States’ (US) ability to perform its most basic duties.
“President Obama cancelled two stops on a planned trip to Asia, and this was a long planned trip. This really shows you the concern that the White House is taking over this. There’s absolutely no end in sight it seems,” said Dolan.
While the standoff seems to be more about ideological differences, Dolan emphasised that if it continues, global markets may be hit with a selloff similar to the one seen ahead of the US’s tapering suspension announcement in September.
The shutdown comes ahead of a meeting where the US is expected to make a decision on raising the country’s debt limit, or risking a default that could affect global markets.
“So far markets are shrugging this off, we’re seeing the Dow slightly weaker but clearly if this goes on, it’s not good for markets. It’s not good for Wall Street and it’s not good for emerging markets such as SA or other sub-Saharan markets,” Dolan explained.
“The markets are telling you that people are not looking to make any significant bets at the moment.”