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Asia: Markets steady, euro bears Greek burden
[SYDNEY] Asian share markets were in a guarded mood on Wednesday as Greece became the first developed economy to default on a loan with the IMF, setting the scene for another day of uneasy action.
While an unwelcome milestone for Athens, it came as no surprise to investors after weeks of stop-start talks and the euro only faded a little to US$1.1135. "There is so much uncertainty, speculation, truth and partial truth that many markets are in stasis; waiting to see which way this goes," said Emma Lawson, senior currency strategist at National Australia Bank.
Calming after two days of wild swings, MSCI's broadest index of Asia-Pacific shares outside Japan inched up 0.1 per cent.
Japan's Nikkei firmed 0.2 per cent, a second day of small gains as it stabilises after Monday's steep fall.
There was unexpectedly upbeat news from the Bank of Japan's latest survey of manufacturers which improved in the three months to June, supporting the bank's view that growth is gathering momentum.
On Wall Street, the Dow had edged up 0.1 per cent on Tuesday, while the S&P 500 gained 0.3 per cent and the Nasdaq 0.6 per cent.
There was little immediate reaction when the International Monetary Fund confirmed Greece had missed a payment on its debt, perhaps taking it a step closer to an exit from the euro.
The IMF said Greece had asked for a last-minute repayment extension earlier on Tuesday, which the Fund's board would consider "in due course." European finance ministers will confer later on Wednesday over Greek Prime Minister Alexis Tsipras' request for a new two-year loan to pay debts that amount to nearly 30 billion euros.
Investors still cling to hopes that a deal will be done at some stage to keep Greece in the euro, keeping currency markets relatively range bound. The U.S. dollar index was up 0.07 per cent at 95.550, having bounced from Tuesday's low of 94.847.
Against the yen, the dollar stood at 122.45, up from a five-week low of 121.93 plumbed overnight.
Investors were again warily eying markets in China where there were tentative signs that Beijing's efforts to stem the recent selloff were starting to work.
A combination of cuts in interest rates, allowing local government pension funds buy stocks for the first time and talk of behind-the-scenes "window guidance" to institutional investors, triggered a sharp rebound on Tuesday.
The CSI300 index rallied 6.7 per cent, while the Shanghai Composite jumped 5.6 percent.
Yet volatility has been so high that few were confident that the market had truly found its footing.
In commodities, oil eased back a touch after bouncing strongly on Tuesday to end the quarter with hefty gains. Brent was quoted down 46 US cents at US$63.59 a barrel, while US crude eased 49 US cents to US$59.47.