Asia Steadies, Euro Bears Greek Burden

Asian share markets were in a guarded mood on Wednesday as Greece became the first developed economy to default on a loan with the IMF, setting the scene for another day of uneasy action.

Published: 01st July 2015 08:09 AM  |   Last Updated: 01st July 2015 08:09 AM   |  A+A-

SYDNEY: Asian share markets were in a guarded mood on Wednesday as Greece became the first developed economy to default on a loan with the IMF, setting the scene for another day of uneasy action.

While an unwelcome milestone for Athens, it came as no surprise to investors after weeks of stop-start talks and the euro only faded a little to $1.1136.

"There is so much uncertainty, speculation, truth and partial truth that many markets are in stasis; waiting to see which way this goes," said Emma Lawson, senior currency strategist at National Australia Bank.

Calming after two days of wild swings, MSCI's broadest index of Asia-Pacific shares outside Japan inched up 0.3 percent.

Japan's Nikkei firmed 0.2 percent, a second day of small gains as it stabilises after Monday's steep fall.

There was unexpectedly upbeat news from the Bank of Japan's latest survey of manufacturers which improved in the three months to June, supporting the bank's view that growth is gathering momentum.

The data was mixed from China where surveys showed sluggish factory activity but a pick up in service sector, a sign the transition to a more consumer-led economy remained on track.

Chinese shares got off to another erratic start, first diving before coming back toward flat. The CSI300 index was off 0.3, while the Shanghai Composite eased 0.6 percent.

Both indices had jumped on Tuesday as Beijing's efforts to stem recent selling seemed to gain traction. A combination of cuts in interest rates, allowing local government pension funds to buy stocks and talk of behind-the-scenes "window guidance" to institutional investors, have helped calm a skittish market.

On Wall Street, the Dow had edged up 0.1 percent on Tuesday, while the S&P 500 gained 0.3 percent and the Nasdaq 0.6 percent.

There was little immediate reaction when the International Monetary Fund confirmed Greece had missed a payment on its debt, perhaps taking it a step closer to an exit from the euro.

The IMF said Greece had asked for a last-minute repayment extension earlier on Tuesday, which the IMF's board would consider "in due course."

European finance ministers will confer later on Wednesday over Greek Prime Minister Alexis Tsipras' request for a new two-year loan to pay debts that amount to nearly 30 billion euros.

Investors still cling to hopes that a deal will be done at some stage to keep Greece in the euro, keeping currency markets relatively range bound. The U.S. dollar index was up 0.08 percent at 95.568, having bounced from Tuesday's low of 94.847.

Against the yen, the dollar stood at 122.50, up from a five-week low of 121.93 plumbed overnight.

In commodities, oil eased back after bouncing strongly on Tuesday to end the quarter with hefty gains. Brent was quoted down 51 cents at $63.08 a barrel, while U.S. crude eased 67 cents to $59.80.

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