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Asia: Stocks mostly up on Greece, Fed hike talk lifts dollar

Tuesday, July 14, 2015 - 11:02
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[HONG KONG] Most Asian markets climbed on Tuesday after Greece and its creditors agreed a debt deal to keep it in the eurozone, while the dollar advanced as attention shifted back to when the Federal Reserve will hike interest rates.

But Shanghai and Hong Kong retreated after a three day rally, although a little more confidence has returned since China moved to prevent a crash last week following a near month-long pummelling.

Tokyo climbed 1.50 per cent as the yen retreated against a resurgent dollar, while Sydney added 1.66 per cent and Singapore put on 0.50 per cent. Taipei added 0.48 per cent and Wellington put on 0.39 per cent.

Shanghai was down 0.40 per cent following a 13 per cent advance in the past three days, while Hong Kong dipped 0.50 per cent after climbing more than seven percent from Thursday.

Seoul was 0.33 per cent lower.

Global markets rallied Monday after Greece finally agreed to an austerity package to unlock billions of euros of much needed cash and, crucially, keep it from plunging out of the eurozone. The announcement, after 17 hours of gruelling talks at an emergency summit, ended a six-month crisis that has kept traders on edge.

On Wall Street the Dow jumped 1.22 per cent, the S&P 500 added 1.11 per cent and Nasdaq gained 1.48 per cent.

And European equities advanced. France's CAC 40 climbed 1.94 per cent and Germany's DAX 30 put on 1.49 per cent, while Milan rose 1.00 per cent and Madrid gained 1.70 per cent.

With the crisis out of the way for now, investors turned their focus back to the Fed's plans for raising interest rates, pushing the dollar up against the yen and the euro.

"As long as this deal holds, a potential roadblock to Fed policy normalisation has been removed with the liftoff from later this year still on track," Mark Smith, a senior economist in Auckland at ANZ Bank New Zealand, wrote in a client note, according to Bloomberg News.

With fed chief Janet Yellen previously saying she expects a rise by the end of this year and a US recovery picking up, dealers are piling back into the dollar. The unit rose to 123.54 yen in Tokyo Tuesday from 123.45 yen in New York. The euro also eased to US$1.0986 from US$1.1004.

The single European currency was, however, up at 135.90 yen against 135.84 yen in US trade.

Markets will be watching a slew of US data this week for a better handle on what the Fed will do, including on industrial output, housing starts, inflation and consumer sentiment.

In China, hundreds of firms were expected to resume trading again on Tuesday, adding to the more than 400 that returned Monday, after they were suspended over the past few weeks to prevent a market meltdown.

Authorities intervened after the Shanghai index plunged 30 percent in three weeks, wiping trillions of dollars from market capitalisations, spreading contagion in regional markets and raising fears over the potential impact to the real economy.

Market watchers are awaiting the release of growth data Wednesday to see if the world's number two economy has picked up after suffering a continuous slowdown for more than a year.

On oil markets, US benchmark West Texas Intermediate for delivery in August fell 58 US cents to US$51.62 and Brent crude for August eased 47 US cents to US$57.38 a barrel in morning Asian trade.

Gold fetched US$1,156.05 compared with US$1,156.64 late Monday.

AFP