HONG KONG (AFP) – Asian markets slipped Tuesday following the previous day’s healthy gains, while the euro struggled against the dollar as Greece plunged back into crisis, rekindling fears of a possible exit from the eurozone.
With investors winding down for the end of the year, Wall Street provided a mixed lead, although the S&P 500 topped out at a new record high.
Oil prices slipped to fresh five-year troughs as ongoing worries about oversupply combine with concerns over the global economic outlook.
Tokyo sank 1.57 per cent, or 279.07 points, to end the year at 17,540.77 – up 7.12 per cent over the year and at levels not seen in seven years.
Sydney fell 1.04 per cent, or 57.18 points, to close at 5,416.6 and Seoul gave up 0.64 per cent, or 12.27 points, to 1,915.59.
Hong Kong ended 1.14 per cent lower, shedding 272.08 points to 23,501.10 while Shanghai was flat, edging down 2.20 points to 3,165.82.
Profit-takers moved in after Monday’s gains that came on the back of strong US economic growth data, while analysts said thin volumes also contributed to the sell-off.
Adding downward pressure was news that Greek Prime Minister Antonio Samaras had called a general election provisionally for January 25 after lawmakers failed in a third attempt to choose a new president.
There are fears that the anti-austerity, far-left Syriza party could win and roll back measures required under the IMF-EU bailout of the country, in turn further weakening the eurozone economy.
“This is the worst-case scenario,” Jan Techau, director of the Carnegie Europe think-tank based in Brussels, told AFP. “The uncertainty is a stark reminder the crisis is not over.”
The events in Greece raise concerns of a return to the crisis of 2010 when the country, unable to service its debts and facing an exit from the eurozone, was forced into taking handouts from the IMF and European Union.
Holger Schmieding of Berenberg Bank said there was “a risk of around 30 per cent that Greece may descend into a new deep crisis”.
The euro, which was already under pressure owing to the eurozone’s stuttering economy, was at levels against the dollar not seen since mid-2012.
In afternoon trade it bought $1.2137, compared with $1.2153 in New York Monday, while it was also at 145.90 yen, against 146.65 yen earlier.
The dollar fetched 120.20 yen, compared with 120.66 yen in US trade.
On Wall Street the S&P 500 gained 0.10 per cent to mark a second successive record close, but the Dow snapped a seven-session winning streak by dipping 0.08 per cent. The Nasdaq was virtually unchanged.
Oil prices, meanwhile, fell. West Texas Intermediate for February delivery slipped 36 cents to $53.25 while Brent crude for February dropped 31 cents to $57.57.
WTI closed down $1.12 to $53.61 in New York while Brent fell 57 cents in London to $57.88. Both contracts last traded at those levels in May 2009.
Analysts predicted further bearishness owing to rising US production despite a global supply glut.
“We are seeing light volumes in Asian trading… oil prices have once again touched new lows over longer term concerns about US production levels,” Michael McCarthy, chief market strategist at CMC Markets in Sydney, told AFP.
Gold was at $1,188.00 an ounce, compared with $1,193.84 Monday.