February 27, 2024

Asian Stocks Rise on Hopes Greece Won’t Default

In a teleconference Wednesday night, German Chancellor Angela Merkel, French President Nicolas Sarkozy and Greek Prime Minister George Papandreou all reaffirmed the belief that Greece is an “integral part” of the eurozone.

Merkel and Sarkozy pledged to help Greece avoid a debt default and Papandreou renewed his commitment to debt-reduction targets.

The news soothed markets that have been rattled over the past few days by fears that debt-ridden Greece was heading rapidly toward a chaotic default as well as the idea that it could potentially leave the euro and return to its own currency.

In early European trading, the FTSE 100 index of leading British shares was up 0.5 percent at 5,252.98 while Germany’s DAX was up 1 percent at 5,395.15. The CAC-40 in France rose 0.5 percent to 2,965.10.

Japan’s Nikkei 225 index rose 1.7 percent to close at 8,668.86 while South Korea’s Kospi advanced 1.4 percent to finish at 1,774.08. Australia’s ASX 200 rose 1.6 percent to end at 4,071.70.

Benchmarks in Singapore, Taiwan and New Zealand also rose.

Hong Kong’s Hang Seng was less than 0.1 percent higher at 19,058.83, dragged down by clothing retailer Esprit Holdings Ltd., which plunged nearly 12 percent after it said full-year profit tumbled.

Mainland Chinese stocks dipped, with the Shanghai Composite Index down 0.2 percent at 2,479.65 after spending the day flip-flopping between positive and negative territory.

The rebound in Asian markets is characteristic of recent volatility in global financial markets and it’s unclear whether the optimism would give more than just a short-term boost, said Ben Collett, head of Japanese equities at Louis Capital Markets in Hong Kong.

“If you’re Greece, that is some positive news. A reaffirmation from two European leaders is certainly positive and it is the sort of things the market wants to hear (although) there’s not much behind it,” said Collett.

“There are ways to solve the European issue but they take time. While we’re waiting for that I think it’s reasonable for the market to get a boost from the politicians but that won’t last forever,” he added.

Collett said markets are still pricing in a Greek default and so-called “haircut” — in which bondholders agree to accept less money than expected for their investments.

However, U.S. stocks were poised to dip. Dow futures were down 0.2 percent at 11,152.00 while broader SP 500 futures were down 0.2 percent at 1,179.40.

In currencies, the dollar strengthened to 76.69 yen from 76.65 yen late in New York on Wednesday. The euro fell to $1.3725 from $1.3752.

Oil prices fell amid signs of sluggish U.S. consumer demand. Benchmark oil for October delivery was down 36 cents $88.54 per barrel in electronic trading on the New York Mercantile Exchange. The contract lost $1.30 to finish Wednesday at $88.91 per barrel.

In London, Brent crude for October delivery was down 33 cents at $109.32 on the ICE Futures exchange.

Article source: http://www.nytimes.com/aponline/2011/09/14/business/AP-World-Markets.html?partner=rss&emc=rss

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