HONG KONG (AFP) – Asia extended a global stocks rally Wednesday while the euro held on to healthy gains as hopes grow that Greece will be able to hammer out a debt deal with its European partners.
Traders followed the lead from across Europe and the United States after Greece’s new leadership impressed with their charm offensive aimed at getting backing for a renegotiation of its bailout.
Oil prices were slightly lower after surging to their highest levels since the turn of the year on news of a cut in the number of rigs drilling and energy giants slashing budgets.
Tokyo surged 1.98 per cent, or 342.89 points to 17,678.74 and Sydney rose for a 10th successive session, adding 1.23 per cent, or 69.9 points, to end at 5,777.34 – a day after the central bank cut its official cash rate to a record low Tuesday.
Seoul ended 0.55 per cent higher, putting on 10.83 points to 1,962.79, while Hong Kong was 0.51 per cent higher, adding 124.98 points to 24,679.76.
However, profit-taking hit Shanghai, with the benchmark index closing 0.96 per cent, or 30.78 points, lower at 3,174.13. It jumped 2.45 two per cent Tuesday.
Anti-austerity Greek Prime Minister Alexis Tsipras and Finance Minister Yanis Varoufakis have been touring European countries ramping up support for their plan to restructure their debt repayments.
Varoufakis is pushing the idea of debt swaps that would avoid the need for creditors to accept losses on the country’s 315-billion-euro ($361-billion) foreign debt, while easing the monthly financing burden on Athens.
While being given a sympathetic ear so far the leadership’s toughest test will come later this week when it must convince European paymaster Germany of its plans.
However, reassurances by Varoufakis and Tsipras to creditors and allies that a default – and possible Greek exit from the single currency area – is not on the cards boosted markets, with Athens surging more than 11 per cent.
There were also healthy gains in London, Paris and Frankfurt, which ended at a record high, while in New York the Dow climbed 1.76 per cent, the S&P 500 put on 1.44 per cent higher and the Nasdaq gained 1.09 per cent.
The surge in confidence filtered through to currency markets, where the euro rocketed one point to as high as $1.1512 before settling back.
In Tokyo trade the single currency bought $1.1470 and 135.00 yen, compared with $1.1479 and 134.96 yen late in New York and sharply up from the $1.13 and 132 yen levels seen in Tokyo earlier Tuesday.
The dollar was at 117.50 yen Wednesday compared with 117.57 yen in US trade.
“The driver appears to be increased market optimism that a solution may be found and indeed is beginning to be worked out between Greece and its creditors,” National Australia Bank said in a note.
But it warned “there is a long way to go yet to cement a deal on Greece and doubtless there will be further market ructions”.
Oil prices retreated after shooting up over the past few days on hopes of rebounding global energy demand and reduced crude production.
US benchmark West Texas Intermediate for March delivery fell 74 cents to $52.31 while Brent crude for March lost 13 cents to $57.78.
Earlier Tuesday Brent had struck $57.23 and WTI touched $51.56.
“With oil having rallied for four days and reached a one-month high, there’s a growing sense that it has bottomed out,” Hiroichi Nishi, an equities manager at SMBC Nikko Securities Inc. in Tokyo, said by phone. “Chances today are quite high for a rebound.”
Gold fetched $1,264.39 an ounce, against $1,281.71 on Tuesday.