HONG KONG: Fears the US economy is facing another huge economic crisis spurred a sell-off in Asian markets Thursday as Barack Obama's re-election raised the spectre of another dangerous stand-off in Washington.
Investors fear a deeply divided Congress will not be able to reach an agreement to avoid a so-called fiscal cliff at the end of the year that many say will send the United States back into recession.
Eyes are also on Beijing, where the Communist Party has kicked off its 18th congress, which will see the beginning of a once-in-a-decade leadership change.
Tokyo stumbled 1.27 percent by the break, Hong Kong skidded 1.24 percent, Sydney lost 0.85 percent, Seoul was 0.89 percent lower and Shanghai fell 0.87 percent.
The initial upbeat reaction Wednesday to Obama's victory over Republican Mitt Romney was replaced Thursday with trepidation as the focus turned to the fiscal cliff, a combination of deep spending cuts and huge tax hikes to take effect on January 1.
The package is a major threat to the economy after a protracted but possibly reckless compromise was agreed last year between Democrats and Republicans in order to raise the country's borrowing cap.
If it kicks in, the United States' slow recovery from the financial crisis could be reversed and the economy tip back into recession, which would in turn deal a major blow to the global economy.
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