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Asia: Stocks climb after Greeks endorse bailout; kiwi tumbles

Thursday, July 16, 2015 - 09:31
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[WELLINGTON] Asian stocks rose and Treasuries retreated after Greek lawmakers voted in favor of new bailout demands, damping concern over a break up in the currency union for now. New Zealand's dollar slumped amid speculation over further policy easing, extending a selloff in commodity currencies.

The MSCI Asia Pacific Index added 0.3 per cent by 10 am in Tokyo, rising for the fifth time in six days as Japanese and Australian gauges rose at least 0.6 per cent. Standard & Poor's 500 Index futures gained 0.1 per cent. Ten-year Treasury yields snapped a two-day retreat, while the euro extended losses against the dollar. The kiwi slid to a six-year low after inflation data and slumping dairy prices enforced concerns over New Zealand's economy. Australia's dollar also weakened.

Greece's parliament endorsed the fresh set of austerity measures as riot police tussled with protesters outside. The focus now shifts to whether the European Central Bank will bolster the nation's financial system. Economists predict New Zealand will join Canada in cutting rates again next week, with commodity-linked currencies leading losses this year amid the retreat in oil to raw materials. Meanwhile, the Federal Reserve is continuing to predict a gradual pace of tightening in 2015.

"Macro themes will not and cannot be removed from the headlines," Evan Lucas, a markets strategist in Melbourne at IG Ltd, wrote in an e-mail to clients. "The fact the gray clouds that are China and Greece have cleared slightly only brings a sharper focus on the biggest macro cloud of 2015 - Fed lift off." China Futures Japan's Topix index rose a fifth straight day, adding 0.6 per cent to be headed for its highest close since June 26. Australia's S&P/ASX 200 Index increased 0.9 per cent, while the Kospi index in Seoul was little changed. Markets in Indonesia are closed for a holiday through next Tuesday.

Futures traded in Singapore on the FTSE China A50 Index - which tracks the biggest mainland Chinese shares - dropped 0.7 per cent in recent trading, while contracts on the CSI 300 Index slipped 4.4 per cent. Futures on the Hang Seng China Enterprises Index, a gauge of Chinese equities listed in Hong Kong, dropped 0.2 per cent in recent trade, and contracts on the broader Hang Seng Index were down 0.1 per cent.

China's Shanghai Composite Index fell a second day Wednesday, sliding 3 per cent after better-than-expected economic growth data failed to boost investor confidence in the unsettled market.

The Chinese stock rout may have larger implications than the US subprime mortgage crisis, said Paul Singer, founder of hedge fund Elliott Management, said at a conference in New York Wednesday. Fellow money managers Bill Ackman and Jeffrey Gundlach have also aired concerns over China.

The kiwi slipped as much as 0.5 per cent to 65.57 US cents, the weakest level since July 2009.

Consumer prices rose 0.3 per cent last quarter from a year earlier, matching the median economist estimate though trailing the central bank's 1 percent to 3 per cent target range. The currency sank as much as 2 per cent Wednesday after whole milk powder prices declined more than 10 per cent at a fortnightly auction. New Zealand, the world's biggest dairy exporter, reviews benchmark rates on July 23.

The Aussie fell 0.1 per cent to 73.72 US cents following Wednesday's 1 per cent retreat. Canada's dollar fell another 0.2 per cent after sinking as much as 1.8 per cent to its weakest level since 2009 on Wednesday. The Thai baht and Korean won were down 0.3 per cent.

The euro fell 0.1 per cent to US$1.0935 after losing 0.5 per cent to the greenback Wednesday. Yields on 10-year Treasuries rose two basis points, or 0.02 percentage point, to 2.38 per cent.

After more than four hours of debate, 229 members of Greece's 300-seat parliament approved new austerity measures that are a precondition of as much as 86 billion euros (S$101.67 billion) in aid. Thirty two members of Prime Minister Alexis Tsipras's Coalition of the Radical Left, or Syriza, opposed the bill, a sign he may have lost his majority.

The onus is now on the ECB and other euro-area governments to deploy more emergency funds that will help Greek banks gradually re-open and repair its beleaguered finances.

Copper climbed 0.2 per cent after falling the past two days, while nickel rallied 0.4 per cent.

West Texas Intermediate crude oil added 0.6 per cent to US$51.70 a barrel after sinking 3.1 per cent last session. Oil supplies at Cushing, Oklahoma, the delivery point for US benchmark oil futures, rose for a third week, data Wednesday showed. While total US stockpiles declined, inventories were still more than 90 million barrels above the five-year average level.

The S&P 500 fell 0.1 per cent on Wednesday, dropping or the first time in five days to halt its longest rally since January. Equities investors largely ignored Yellen's testimony, as it tracked closely with comments she made July 10, while bond traders jumped on to her reiteration that rate increases this year will be gradual.

Fed funds futures showed a 37 per cent chance the central bank will boost its benchmark rate in September, up from 31 per cent on Tuesday. Futures are pricing in 70 per cent chance of a hike by December, up from 66 per cent, according to data compiled by Bloomberg.

BLOOMBERG