Greece standoff keeps Asian markets off balance, but US dollar gains
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Version 0 of 1. Asian shares lost early steadiness and Chinese stocks got off to a weak start on Thursday, while upbeat US economic data helped the dollar gain as investors globally opted for caution due to Greece’s standoff with its creditors. MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.13% following yet another weak opening in China’s benchmark indexes. Tokyo’s Nikkei climbed 1.1% thanks to a weaker yen, while South Korea’s Kospi rose 0.3%. Investors’ expected appetite for risk is likely to be sapped in coming months by uncertainty over whether Greece can step back from an economic abyss after its debt default to the International Monetary Fund, and doubts over its future in the eurozone. “We are shaping up for a bumpy ride in the summer as the ongoing Greek crisis means investors are adopting a risk-on, risk-off approach towards risky assets,” said Tai Hui, chief markets strategist at JP Morgan Asset Management in Hong Kong. Chinese markets got off to a rocky start, with the Shanghai index down more than 1% in opening trades after a near 5% slide on Wednesday, despite regulators announcing a raft of market-friendly measures since last week, including an interest rate cut over the weekend. Investors elsewhere fixed their eyes on Athens. The Greek prime minister, Alexis Tsipras, has called a referendum on Sunday that could determine his country’s future in Europe. On Wednesday, Tsipras urged Greeks to reject an international bailout deal, souring hopes of any breakthrough. “July 5th [the day of Greek referendum] is the next key date for the euro, and after that July 20th, when Greece owes the European Central Bank €3.5bn,” Kathy Lien, managing director of FX Strategy for BK Asset Management, wrote. “If this payment is missed, the ECB will most likely pull the plug on liquidity to Greek banks, which would have a more dramatic impact than the latest default, leading to increased uncertainty for Greece, the euro and the financial markets as a whole.” The euro came under pressure once more as hopes of a resolution retreated overnight. The common currency’s fall was exacerbated by strong US data, which pushed Treasury yields higher and underpinned the dollar. The ADP National Employment report on Wednesday showed 237,000 private-sector US jobs were created in June. Construction spending in May was equally strong, hitting the highest level since October 2008. Investors are now awaiting another batch of US data from durable goods to non-farm payrolls ahead of the independence day holiday on Friday. The euro was down 0.1% at $1.1048 after losing 0.9% on Wednesday. The euro has lost about 1.1% so far this week. The dollar was also up against the yen, gaining 0.2% to 123.44 and hovering near a one-week high. In commodities, US crude steadied somewhat after shedding 4% overnight on data showing stockpiles in the United States rose for the first time in more than two months. US crude was little changed at $57.04 a barrel. |