BLBG:Asian Stocks, Euro, Oil Advance On Greek Pro-Bailout Vote
Asian stocks and the euro rose to the highest levels in a month, while European equity futures and commodities climbed as gains by pro-bailout parties in Greek elections eased concern the nation would exit the euro. Indian stocks erased advances after the central bank unexpectedly left rates unchanged.
The MSCI Asia Pacific Index climbed 1.5 percent to the highest since May 16 at 7:05 a.m. in London. Futures on the Euro Stoxx 50 Index gained 1.9 percent and Standard & Poor’s 500 Index futures added 0.4 percent. The euro strengthened 0.6 percent to the highest since May 22, and the dollar and yen fell against most major counterparts. The S&P GSCI Index of 24 commodities rose 0.8 percent while bond risk in Asia dropped to the lowest since May 8.
The New Democracy and Pasok parties won enough seats to form a majority in the 300-member parliament, according to an official projection, easing concern that Greece would reject austerity measures needed to qualify for international aid. India’s Sensex index erased earlier gains after central bank governor Duvvuri Subbarao left the benchmark repurchase rate at 8 percent, citing inflation concerns.
“The market will breathe a sigh of relief,” Todd Lowenstein, who helps oversee about $17 billion for Highmark Capital Management Inc. in Los Angeles, said in a phone interview. “The results of the Greek election took a negative off the table versus this being a big positive. At the end of the day, there are still structural issues and imbalances that need to be corrected and dealt with.”
G-20 Meets
The vote forced Greeks, in a fifth year of recession, to choose open-ended austerity to stay in the euro or reject the terms of a bailout and risk the turmoil of exiting the 17-nation currency. European governments indicated a willingness to relent on Greece’s austerity measures.
The new government must emerge “swiftly” from the contest, euro finance ministers said in a statement on June 17. Greece’s international monitors will “return to Athens as soon as a new government is in place to exchange views with the new government on the way forward,” according to the e-mailed statement.
Discussions among officials from the Group of 20 nations over ways stimulate the global economy are similar to those that took place at the summit in Cannes, France last year, where countries made varying commitments to support the global economy, with some European countries pledging to reduce deficits while emerging markets and those with healthier finances would boost spending if needed, a Canadian official said.
Trillions Lost
G-20 leaders will issue a statement at the end of their two-day summit in Los Cabos, Mexico, on June 19. They will boost the $430 billion firewall the International Monetary Fund announced in April, host President Felipe Calderon said June 16.
More than $5 trillion has been erased from stock prices around the world since March, with benchmark indexes in Brazil, Russia and Italy falling into bear markets, or losses of 20 percent or more from recent peaks. Shares of mining companies may gain as metals including copper, lead and nickel rose.
The MSCI Asia-Pacific Index has lost 11 percent from this year’s highest level in February. About four shares rose for each that fell in the gauge. Hong Kong Exchanges & Clearing Ltd., the world’s second-largest bourse operator, slipped 4.1 percent after agreeing to pay 1.39 billion pounds ($2.18 billion) for the London Metal Exchange.
Sensex Declines
India’s Sensex index fell 1 percent as 19 of 25 economists in a Bloomberg News survey expected a 0.25 percentage-point cut, while only four predicted the outcome. Banking shares led declines, with State Bank of India, the nation’s biggest lender, tumbling 3.1 percent and ICICI Bank Ltd. dropping 2.5 percent.
“This is a shocker,” D.K. Aggarwal, who manages about $100 million of Indian assets as chairman of New Delhi-based SMC Wealth Management Ltd. “A rate cut was a must because the growth was slowing.”
The MSCI All-Country World Index rose 1.7 last week, gaining for a second straight week, amid speculation central banks will increase measures to stimulate growth in economies threatened by Europe’s debt crisis.
“There’s a short-term sigh of relief,” said Belinda Allen, Colonial First State Global Asset Management in Sydney, which oversees about $145 billion. “The medium term is still challenging. And we’ve got the Federal Reserve meeting this week. Markets will turn their attention to what the Fed is going to say. They’ve certainly been suggesting that they can do more. Whether or not they’re willing to do it now is the big question.”
Commodities Increase
Reports on U.S. industrial production, jobless claims and consumer confidence last week trailed projections, fueling expectations that the central bank will take more steps to boost the economy when it meets for two days from June 19.
The S&P GSCI index rose for a third day as oil in New York advanced as much as 1.9 percent to $85.60 a barrel, the highest intraday price since June 11, while copper in London gained as much as 1.4 percent to the highest in more than two weeks. Gold fell 0.2 percent to $1,622.28 an ounce as demand for haven assets diminished.
The cost of insuring Asian corporate and sovereign bonds from default decreased with the Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan losing 6.5 basis points to 173.5 basis points as of 8:53 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The index is headed for its lowest close since May 8, according to CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.
The euro extended last week’s 1 percent jump against the dollar as Greek election winner Antonis Samaras begins his second bid to form a coalition government after a May 6 election left politicians deadlocked. The crisis escalated on June 9 when Spain asked for a bailout of as much as 100 billion-euro ($127 billion) to prop up its banks.
The Australian dollar touched a one-month high as Australia’s Treasurer said mineral exploration spending in the nation rose to a record in March. New Zealand’s dollar reached the strongest in six weeks as data showed the country’s services industries grew last month.
To contact the reporters on this story: Glenys Sim in Singapore at gsim4@bloomberg.net; Rita Nazareth in New York at rnazareth@bloomberg.net
To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net
