Obama cancels Asia tour in US shutdown storm

US Government emergency workers sent home because of a political deadlock in Congress were being urgently recalled to today as the first cyclone to threaten the US coast this year swept across the Gulf of Mexico.

As President Obama cancelled a trip to Asia, the Federal Emergency Management Agency ordered staff to report for duty. Mr Obama is staying in Washington to try to break the stalemate which has halted federal government funding and led to 800,000 public sector workers being told to stay at home.

European markets dipped in early trading amid fears that the impasse in Congress — with Republicans refusing to agree to federal funding unless Mr Obama changes his flagship healthcare reforms — could last for weeks.

Christine Lagarde, head of the International Monetary Fund, is warning that it is “mission critical” that America agrees a deal to raise its $16.7 trillion debt ceiling on October 17. A default could cause its credit markets to freeze, the value of the dollar to plummet and US interest rates to rocket.