Wed, Jan 07, 2015 - Page 15 News List

Asian stocks sink on oil, Greece crisis

ALREADY ‘MAKING HEADLINES’:Losses in New York and Europe, sparked by an oversupply of commodities and eurozone instability, prompted selling in Japan


Tokyo’s Nikkei led an Asian share slump yesterday, following painful losses in New York and Europe, with fears sparked by the global slump in oil prices and the Greek political crisis.

The euro sat near nine-year lows as the uncertainty in Greece raised the prospect it could leave the eurozone.

Investor fears intensified after oil prices fell below the psychological US$50 a barrel mark in US trade.

Prices edged up marginally, but remained under pressure owing to a global supply glut, weak demand and a stronger US dollar.

Tokyo plunged 3.02 percent, or 525.52 points, to 16,883.19, Seoul lost 1.74 percent, or 33.30 points, to close at 1,882.45 and Sydney fell 1.57 percent, or 85.53 points, to 5,364.8.

Hong Kong’s Hang Seng Index fell 0.99 percent, or 235.91 points, to 23,485.41. In China, the benchmark Shanghai Composite Index was flat, edging up 0.93 points to 3,351.45 — the highest since August 2009, while the Shenzhen Composite Index rose 1.70 percent, or 24.46 points, to 1,461.32.

Elsewhere in Asia, Taipei fell 2.43 percent, or 225.77 points, to 9,048.34, and Wellington gave up 0.74 percent, or 41.22 points, to 5,561.38.

The first full week of the new year got off to a traumatic start for dealers as they bet that a Jan. 25 general election in Greece would see a victory for the left-wing SYRIZA party.

Markets fear the party will roll back austerity measures required under the IMF-EU bailout of the country, which could in turn lead it to exit the eurozone.

The year is “barely three trading days old and already the two biggest themes that were predicted to affect the markets this year are making headlines: oversupply of commodities and the eurozone,” Evan Lucas, a markets strategist in Melbourne at IG Ltd, wrote in an e-mail to clients, according to Bloomberg News.

Over the weekend, Der Spiegel quoted German government sources as saying they consider Greece’s exit “almost inevitable” if SYRIZA wins the snap poll.

German Chancellor Angela Merkel and Minister of Finance Wolfgang Schaeuble had come to consider Athens’ removal from the bloc would be “manageable,” the magazine said.

However, investors were spooked and on Monday, Greek stocks sank more than 5 percent, while the stock exchanges in Paris, Madrid and Milan all fell more than 3 percent.

The Dow Jones Industrial Average dived 1.86 percent on Monday, the S&P 500 fell 1.83 percent and the NASDAQ lost 1.57 percent.

In currency trade, the euro sank to US$1.1864 on Monday, its lowest level since March 2006. Yesterday, the single currency had slightly recovered, buying US$1.1966.

Meanwhile, the euro was at ¥142.10, against ¥142.74 in US trade and well down from the ¥144.58 on Friday.

Adding to downward pressure is increased speculation that the European Central Bank would buy eurozone government bonds to counter deflation risks.

The US dollar was at ¥118.75 yesterday, compared with ¥119.61 in New York on Monday and well down from ¥120.46 on Friday.

Oil prices were marginally up yesterday after slipping below US$50 for the first time in more than five years in New York.

US benchmark West Texas Intermediate for February delivery rose US$0.06 to US$50.10, while Brent crude for February gained US$0.01 to US$53.12. WTI tapped US$49.95 on Monday.

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