Asian markets welcome Greek confidence vote

HONG KONG: Asian stock markets jumped on Wednesday after Greece’s embattled prime minister won a confidence vote, taking him one step closer to pushing through austerity measures and avoiding a default.
Tokyo rose 1.30 percent, Hong Kong climbed 0.69 percent, Sydney was up 0.85 percent and Seoul added 0.93 percent.
In Shanghai, concerns over a widely expected interest rate hike tempered gains, with the bourse adding just 0.08 percent in early trade.
Just hours before Asian markets opened, Greek Prime Minister George Papandreou successfully mobilised his thin majority — despite the presence of 4,000 angry demonstrators outside parliament — to win a vote he said paved the way for cuts needed “to avoid bankruptcy and keep Greece in the euro core”.
Athens now effectively has two weeks to convince its European peers that it will carry out long-delayed structural reforms and privatisations in order to secure badly needed bailout money before its funds run out in July.
The eurozone issued an ultimatum to Greece on Monday, when it held back the latest slice of a 110-billion-euro (160-billion) rescue loan package agreed last year.
It told Greek lawmakers, in effect, to support the government and approve swingeing new budget cuts, saying further delay and uncertainty could increase pressure throughout the eurozone.
Greece needs the 12-billion-euro loan instalment to pay bills next month.
A much bigger issue for the whole eurozone is a second loan package, expected to be around 100 billion euros, needed by Athens to avoid default on its debt in the months and years ahead.
Ahead of the vote, optimism had gripped Wall Street, where the Dow Jones Industrial Average added 0.91 percent, the S&P 500 climbed 1.34 percent and the tech-heavy Nasdaq Composite surged 2.19 percent.
“The Greece situation in recent days has at least shown signs of progression rather than stagnation,” said Tim Waterer, senior currency Dealer at CMC Markets in Sydney.
“The march higher in equities… provided some comfort to a market which is desperate to latch onto any hint of good news,” he said.
The news from Europe took a bit of steam out of the euro as investors moved to reap profits from the currency’s overnight gains.
The euro fell to 1.4350 in Tokyo morning trade from 1.4408 in New York late Tuesday. The European single currency also softened to 115.17 yen from 115.53 yen.
The dollar was rangebound at 80.24 yen against 80.22 yen.
With the breathing space provided by the vote, attention could now shift to the US economy and a key meeting of the Federal Open Market Committee, the body within the Federal Reserve that sets interest rates.
The FOMC began its two-day meeting on Tuesday, and on Wednesday it is expected to announce it will allow its 600 billion asset purchase programme to expire as scheduled at the end of June.
Oil was mixed, with New York’s main contract, West Texas Intermediate (WTI) light sweet crude for August delivery, down 46 cents to 93.71 a barrel and Brent North Sea crude for delivery in August up 31 cents to 111.26.
Gold opened in Hong Kong at 1,546.50-1,547.50 an ounce, slightly up from Tuesday’s close of. (AFP)