Asian debt follows treasuries lower on Greek optimism; oil rises

Published Wed, Feb 11, 2015 · 01:17 AM
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[HONG KONG] Asian bonds fell, pacing declines in US Treasuries as optimism a compromise will be reached over Greece's debt obligations damped demand for sovereign notes. Australian stocks fell a third day, while crude oil climbed.

Ten-year bond yields from Australia to Hong Kong rose at least two basis points by 11.59 am in Sydney, with Japanese markets closed for a holiday. Australia's S&P/ASX 200 Index slipped 0.3 per cent as drugmaker CSL Ltd slid on a reduced profit forecast, helping the MSCI Asia Pacific excluding Japan Index down 0.2 per cent. Nasdaq 100 Index futures rose 0.1 per cent after Apple Inc.'s market value rose above US$700 billion for the first time. The Korean won weakened as ruble forwards climbed. Oil in New York rose for the fourth time in five days.

Two summits set to drive global markets take place in Europe on Wednesday. Germany is maintaining Greece must comply with the terms of its bailout heading into a creditors meeting in Brussels, as speculation grows that a funding compromise will eventually be reached. President Barack Obama urged his Russian counterpart in a phone call to seize the opportunity posed by talks on the Ukraine conflict in Belarus. Analysts predict US oil supplies extended a record high last week.

"The markets don't see a Greek exit as highly likely and certainly don't think there's a really negative outcome looming," Mark Lister, head of private wealth research at Craigs Investment Partners Ltd, which manages about US$7.2 billion, said by phone from Wellington. "There are still a lot of risks out there but then again the world is growing very slowly, interest rates are at zero and central banks remain stimulatory so equities can still grind higher, just with more volatility."

Yields on Treasury notes due in a decade rose for a fourth straight day in New York, adding two basis points, or 0.02 percentage point, to 2 per cent, the highest level since Jan 8.

Australian bonds led the retreat in Asian debt, with 10- year rates climbing a fourth day, up seven basis points to 2.62 per cent. Hong Kong's 10-year yields added two basis points to 1.50 percent, while similar maturity notes in New Zealand yielded 3.33 per cent, up five basis points.

Greece has been seeking to drum up support for a 10 billion-euro (US$11.3 billion) bridge plan as the country seeks to stave off a funding crunch and buy time to win an easing in austerity terms from creditors. Any deal would require an easing of Germany's stance in the standoff. German Finance Minister Wolfgang Schaeuble said there were no plans to discuss a new accord with Greece at the emergency meeting in Brussels, or to give the country more time, 'Intense Contacts' Greek Finance Minister Yanis Varoufakis told lawmakers on Monday that the government intends to neither tear up the existing bailout agreement, nor allow the budget to be derailed.

The European Commission denied reports it will present a compromise proposal at Wednesday's meeting, saying "very intense contacts are ongoing between" Commission President Jean-Claude Juncker, Greek Prime Minister Alexis Tsipras and others, and that the plan being worked on is to keep Greece in the euro area.

While speculation of a Greek compromise deal fueled gains in US and European equities, CSL's 9 per cent slump - the biggest on a closing basis since July 2008 - helped drive the S&P/ASX 200 to its lowest level since Feb 3 in Sydney. The Kospi index in Seoul climbed 0.5 per cent, while the NZX 50 Index gained 0.2 per cent in Wellington.

The Standard & Poor's 500 Index rose 1.1 per cent on Tuesday, erasing its 2015 decline, while the Nasdaq Composite Index increased 1.3 per cent to near a 15-year high.

Apple climbed 1.9 per cent to US$122.02 in US trading, swelling its market capitalization to US$710.7 billion, according to data compiled by Bloomberg. The company reported record profit in the fourth quarter, on sales of larger-screen, more expensive iPhones and rising China revenue.

West Texas Intermediate crude advanced 1.4 per cent to US$50.71 a barrel after sinking 5.4 per cent in Tuesday trading. Oil-price volatility is near the highest level in six years amid speculation over the pace of the slowdown in US output.

Data from the Energy Information Administration on Wednesday will show US oil inventories rose by 3.75 million barrels last week, according to energy analysts surveyed by Bloomberg. Stockpiles in the previous week were at 413.1 million, the highest level in weekly records from the Energy Department's statistical arm dating back to August 1982.

The International Energy Agency said on Tuesday that the US will remain the biggest contributor to global growth in oil supplies through 2020. Opec's attempts to defend its market share will hurt other suppliers including Russia more, the IEA said.

Copper futures on the Comex declined for a fourth session, slipping 0.2 per cent to US$2.5455 a pound. One-month ruble forwards climbed 0.6 per cent, while the won weakened 0.7 per cent to 1,096.64 a dollar.


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