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Asia stocks rise while gold drops on bets Greece to stay in Euro
[WELLINGTON] Asian stocks rose, with the regional index headed for a two-month high, while gold fell for a third day amid speculation Greece will stay in the euro region. Norway's krone strengthened after finishing on Monday at a 12-year low.
The MSCI Asia Pacific Index added 0.5 per cent by 12.26pm in Tokyo, rising for the sixth time in seven days, as Japan's Topix index advanced 1.2 per cent. Standard & Poor's 500 Index futures were little changed. Gold retreated 0.2 per cent.
The krone gained 0.5 per cent as oil in New York traded at US$45.22 a barrel following a three-day loss of more than 5 per cent. Ruble forwards fell 2.3 per cent after S&P cut Russia's foreign- currency rating to junk.
European finance ministers signaled willingness to work with Greek Prime Minister-elect Alexis Tsipras as long as he drops demands for a debt writedown, a central plank of the victorious Syriza party's election platform. Chinese industrial profits declined 8 per cent in December, the most since at least 2011, data today showed.
"The Greek elections had the potential to unnerve the market," Nader Naeimi, who helps manage about US$125 billion as head of dynamic asset allocation at AMP Capital Investors in Sydney, said by phone. "It's quite encouraging that the new government and the EU are willing to negotiate. The market is in a risk-on mode." Australia's S&P/ASX 200 Index rose 0.7 per cent and the Kospi index in Seoul gained 0.4 per cent.
The Shanghai Composite Index slipped 1.5 per cent and a gauge of mainland companies in Hong Kong retreated 1.1 per cent after the industrial profit report. The Hang Seng Index fell 0.7 per cent from a four-month high.
Tencent Holdings Ltd., operator of China's largest instant messaging service and the best- performing stock on the Hang Seng Index this year, fell 1.8 per cent after closing at a record yesterday.
In the US, the S&P 500 rose for the fifth time in six days, adding 0.3 per cent on Monday. Volumes were almost 7 per cent below their 30-day average as traders and investors left New York early to avoid a blizzard that's already disrupted mass transit and flights out of the city. Microsoft Corp. lost 4.4 per cent in extended trading after reporting lower-than-expected sales of software licenses for the fiscal second quarter.
Gold dropped to US$1,279.28 an ounce, declining for a third straight day. The yen climbed 0.2 per cent to 118.24 per dollar and 132.93 per euro.
Mr Tsipras, 40, has pledged to keep Greece within the euro area as he negotiates a writedown of Greek debt and eases budget constraints that were imposed in return for aid after the country's economic collapse.
Greece's current round of funding expires Feb 28 and talks with the so-called troika - the International Monetary Fund, the European Commission and the European Central Bank - for its renewal have stalled since September amid demands for further belt tightening.
"Uncertainty is likely to remain elevated until we get clear confirmation from Syriza that they will negotiate constructively with creditors," Sharon Zollner, a senior economist in Auckland at ANZ Bank New Zealand Ltd., wrote in a client note today. "There is a giant game of chicken going on, no one wants a 'Grexit'." Greek 10-year bonds fell Monday, pushing yields on the 2025 securities up 68 basis points, or 0.68 percentage point, to 9.09 per cent, after the rate dropped 56 basis points on Jan 23.
The country's benchmark equity gauge declined 3.2 per cent, paring a 6.1 per cent gain on Friday.
The dollar bought 7.77 krone after Norway's currency weakened 0.5 per cent to 7.8040 per greenback yesterday, the lowest since August 2002. West Texas Intermediate crude was 0.2 per cent higher today after sliding more than 5 per cent over the past three trading days amid ongoing concern over the global supply glut for oil. WTI settled at US$45.15 a barrel on Monday, the lowest price since March 11, 2009.
Stockpiles of crude in the US, the world's biggest oil consumer, probably increased by 4.25 million barrels last week, according to a Bloomberg News survey of energy analysts before government data on Wednesday. Brent gained 0.3 per cent to US$48.32 in London.
The Bloomberg Russia-US Equity Index fell 5.5 per cent, ending a three-day gain, while one-month forwards on the ruble retreated a second day, declining to 69.594 a dollar. The currency slumped 7.1 per cent against the greenback on Monday as S&P reduced Russia's rating one level to BB+ with a negative outlook, putting it below investment grade for the first time in a decade.
The US and the European Union also warned that Russia may face further repercussions after a rocket attack on the Ukrainian port city of Mariupol on Saturday. The US, Nato, and the OSCE said the attack came from rebel-held territory, while the separatists blamed Ukrainian government forces.