Asian shares and the euro gained modestly on Monday, relieved by the Greek Parliament’s passage of austerity measures which put the country a step closer to securing a much-needed bailout fund and avoiding a messy default.
MSCI’s broadest index of Asia Pacific shares outside Japan edged up as much as 0.3% on the news.
The index hit a six-month high on Thursday on optimism that Greece would clinch a deal on austerity measures, only to pull back on Friday when global lenders demanded that more steps needed to be taken to show Athens’ commitment before they would agree on a crucial second bailout.
Japan’s Nikkei opened up 0.1%.
The Greek Parliament approved on Monday the deeply unpopular austerity Bill, while serious violence broke out on the streets of Athens and spread across the country.
Sealed approval
The European Union meets on Wednesday to discuss giving a seal of approval for the new €130-billion bailout. Greece needs the fund ahead of a major bond redemption on March 20.
But along with the parliamentary approval, Greece must also find a further €325-million euros of spending cuts and political assurances must be given that the plan will be implemented.
“Given that the recent risk-taking sentiment has been based on an assumption that a disorderly default will be avoided, the approval confirms that this assumption is still valid and will support sentiment,” Junya Tanase, chief currency strategist at JPMorgan Chase in Tokyo.
“As long as other riskier assets respond positively, the euro will also keep a relatively firm tone. But this is just one of the many issues Greece still must solve, and markets will remain jittery over headline risks on Greece,” he said.
The euro climbed to a session high of $1.3262 on the Greek parliamentary approval and last stood at $1.3240, up 0.3%.
Currency speculators cut their bets in favour of the US dollar and also reduced their bets against the euro in the latest week, according to the Commodity Futures Trading Commission data released on Friday.
Eyes on debt sales
Gold was up 0.5% at $1 728.00 an ounce, boosted by the Greek vote, as the euro and equities recovered. Bullion fell on Friday, as uncertainty over Greece prompted investors to sell the metal and hoard cash.
Oil was up early on Monday, with US March crude up 0.69% at $99.35 a barrel, after snapping a three-day rise on Friday when sentiment was weighed by worries over Greece and a forecast by the International Energy Agency for lower oil demand growth this year.
Brent March crude futures fell $1.28 to settle at $117.31 a barrel on Friday, after a string of eight straight gains.
With markets expected to remain nervous about the developments over the Greek bailout, a slew of debt auctions scheduled this week by Italy, Spain and France will be watched closely as a gauge of investor confidence in the eurozone’s high-yielding sovereign debts.
German Bunds rallied while yields rose on Italian and Spanish bonds on Friday.
Asian credit markets were slightly firmer early on Monday, with the spreads on the iTraxx Asia ex-Japan investment grade index narrowing by one basis point from Friday. — Reuters