Asia shares steady, investors look to next phase of Greek deal

Tuesday, 24 February 2015 00:55 - - {{hitsCtrl.values.hits}}

Reuters: Asian shares were flat on Monday as many countries in the region returned from Lunar New Year holidays, with sentiment supported by relief that Greece reached a deal to avert an immediate fiscal crisis. Euro zone ministers late on Friday agreed to extend Greece’s financial rescue package by four months, a shorter extension that the six months the country had sought. Relief over the last-minute deal boosted Wall Street shares to record highs, and was likely to jump-start European markets.

Spreadbetters saw Britain’s FTSE 100 and Germany’s DAX opening about 0.5% higher, and France’s CAC 40 up 0.8%. The Greek stock market will be closed on Monday for a public holiday. “Friday’s agreement between Greece and the EU left both sides claiming victory, as well as pushing stock markets in the US to record highs, and looks set to see European markets open higher this morning with the FTSE100 potentially opening at a record high,” Michael Hewson, chief strategist at CMC Markets in London, said in a note to clients. But Asian markets as a whole saw little follow-up buying after the US gains. MSCI’s broadest index of Asia-Pacific shares outside Japan was virtually flat from its Friday close, after earlier drifting lower. US stock futures were also nearly flat in Asian trading, but Japan’s Nikkei took a cue from Wall Street’s Greek-relief rally to rise 0.7% and notch another 15-year high. “The debt deal is giving comfort to the market,” said Masashi Oda, chief investment officer at Sumitomo Mitsui Trust Bank, adding that investors’ risk appetite for Japanese shares is mainly due to their attractive valuations. Activity in Asia is expected to pick up this week as many market players return from Lunar New Year holidays, with mainland Chinese markets set to remain closed until Wednesday. Oil prices wobbled, as cautious optimism about the Greek debt deal struggled to offset supply concerns. Brent pared gains and was slightly higher at $ 60.24 a barrel, while US WTI crude erased its earlier rise and dropped about 0.3% to $ 50.66. Greece has to provide a list of reform measures to euro zone by Monday to secure financing, but domestically it came under attack for selling ‘illusions’ to voters after failing to keep a promise to extract the country from its international bailout. “Ultimately Greece has to carry out reforms but it is uncertain given that the government has won by promising not to reform,” said Hiroki Shimazu, senior market economist at SMBC Nikko Securities. The euro traded at $ 1.1377 little changed from Friday’s late US levels and within its well worn trading range of the past few weeks centring around $ 1.13-1.15. The yen was also steady for much of the session, trading at 118.95 yen against the dollar, after a rise in US Treasury yields after the Greek bailout agreement on Friday helped the US unit climb off a low of 118.30 yen. Later on Monday, Germany’s Ifo business climate index is expected to show a continued recovery in the euro zone’s powerhouse economy. Looking ahead, investors will focus on Federal Reserve Chair Janet Yellen’s testimony on the economy and monetary policy before the US Congress on Tuesday and Wednesday. Although the minutes from the Fed’s last policy meeting published last week were more dovish than expected, increasing signs of strength in the US jobs market could revive expectations of a rate hike in June.

Oil prices dip as worries over US oversupply drag

Reuters: Oil prices dipped on Monday on worries about oversupply in North America, with Brent futures testing support around $ 60 a barrel and US contracts hovering around $ 50.70. After an initial rise on Monday along with global markets on optimism that another euro zone crisis over Greek debt had been averted for now, prices began dipping as analysts said crude markets remained oversupplied, especially in the United States, where inventories are at record highs. Benchmark US WTI crude futures were trading down 9 cents at $ 50.72 a barrel by 0745 GMT. Brent crude was trading 5 cents lower at $ 60.17. Several banks on Monday said they expected prices to keep falling. “We expect prices to head back below $ 50/bbl in the coming weeks, with a target of $ 43/bbl over the next 2-3 months,” ANZ said. Barclays also said the market would weaken again in the near future. Morgan Stanley warned US crude stocks were set to build through May. “Similar to last year, growing US and Canadian production combined with refinery maintenance and an only marginal decline in imports is to blame,” it said. Oil prices began tumbling in June 2014 as traders reacted to a growing glut, but prices have picked up since mid-January with Brent jumping almost $ 20 a barrel to touch $ 63 a barrel last week as traders closed long-standing short positions in reaction to a falling US rig count.