AP and AFP
SEOUL /HONG KONG–Asian stock markets were ruffled Wednesday by Greece’s impending cash crunch and expectations the Federal Reserve will raise interest rates this year for the first time in almost a decade. But Europe and U.S. futures traded higher.
Europe bounced back from the previous session’s losses. The UK’s FTSE 100 rose 0.7 percent to 6,996.01 and Germany’s DAX added 0.3 percent to 11,666.36. France’s CAC-40 advanced 0.7 percent to 5,117.55. Futures augured a tepid start for Wall Street. S&P 500 futures rose 0.1 percent and Dow futures also edged up 0.1 percent.
After the ��Federal Reserve Bank of Atlanta upgraded its gross domestic product forecast for the second quarter, traders quickly upped their bets on the prospects of the Fed tightening this year,�� said Stephen Innes, senior trader at OANDA Asia Pacific. ��Investors are mulling the possibility of a Greek default and the changing political landscape in Spain. Anti-austerity parties are gaining traction across the eurozone’s periphery, and that’s driving risk-off sentiment in currency markets that are reeling from the Greek drama,�� Innes said.
Tokyo, Shanghai Rallies Buck Asian Market Losses
Tokyo’s stock market clocked up a ninth straight gain Wednesday thanks to a weaker yen while Shanghai jumped for a seventh session as investors bet on China unveiling more economy-boosting measures. However, most other markets in Asia retreated following a sell-off on Wall Street. The euro edged up slightly on bargain-buying although it is still struggling due to fears that Greece will default on its debt obligations. An upbeat series of U.S. data has put the wind back in the sails of the U.S. dollar, which is sitting just below eight-year highs against the yen as the chances of an interest rate rise increase. Sydney shed 0.83 percent, or 48.1 points, to close at 5,725.3 and Seoul sank 1.68 percent, or 36.00 points, to 2,107.50, while Hong Kong fell 0.60 percent, or 168.65 points, to 28,081.21 Singapore closed down 1.01 percent. Tokyo reversed morning losses to close up 0.17 percent, or 35.10 points, at 20,472.58 �X a 15-year high. And Shanghai gained 0.63 percent, or 30.81 points, to 4,941.71, meaning the index has put on more than 15 percent since it last fell on May 18 and is now at a seven-year high. U.S. traders fled to the sidelines Tuesday as they returned from a long weekend to a strong dollar, which hurts exporters. Modest improvements in U.S. consumer confidence, home sales and prices, as well as orders for core industrial goods, pointed to a pick-up in growth in the world’s biggest economy. US Rate Hike
The data, along with comments from Federal Reserve chief Janet Yellen who said on Friday that she expects to raise interest rates ��at some point this year,�� put upward pressure on the dollar.
��Whether it’s durable goods, housing data or consumer confidence, U.S. data are all above market expectations,�� Hiroichi Nishi, a manager at SMBC Nikko Securities in Tokyo, told Bloomberg News. ��This leads to the view that the rate hike will come within this year.�� On Wall Street the Dow tumbled 1.04 percent, the S&P 500 fell 1.03 percent and the Nasdaq lost 1.11 percent. The long-running saga over Greece’s bailout reform continues to drag on confidence, with the country unable to reach an agreement with its creditors that will release cash to help it avoid a default.