Asian stocks rally after Greek poll
Asian stock markets were up sharply after elections in Greece eased fears of global financial turmoil, but analysts warned that the economic crisis shaking the 17 nations that use the euro is far from over.
Stock markets rejoiced at the narrow victory by Greek conservatives who favour upholding an austerity programme that their recession-mired country entered into in exchange for a financial bailout from international lenders.
The results relaxed fears that Greece will stop using the euro and return to its old currency, the drachma, unleashing a host of disruptive financial consequences in Europe and beyond. If a party that opposes the bailout had won the election, financial analysts worried that stock markets would fall worldwide.
Tokyo's benchmark Nikkei 225 index was up 1.9% at 8,729.47. Hong Kong's Hang Seng rose 1.6% to 19,532.16. Australia's S&P/ASX200 added 1.9% to 4,133.70 and South Korea's Kospi rose 2% at 1,895.55.
On Wall Street, Dow Jones industrial average futures were up 40 points early on Monday, suggesting the market could open higher. The euro rose to 1.2703 US dollars from 1.2637 late on Friday. The dollar rose to 79.16 yen from 78.71 yen.
The New Zealand and Australian dollars were also higher. Both currencies typically rise when investors have more appetite for risk. The Australian dollar was trading above 1.01 dollars and the New Zealand dollar was trading above 79 cents.
"Europe has survived its worst crisis in the 21st century. I see Europe rebounding for the rest of the year," said Francis Lun, managing director of Lyncean Holdings in Hong Kong.
On Sunday, pro-bailout parties in Greece won enough seats to form a coalition government. Greece has been dependent on rescue loans to operate since May 2010, after it was shut out of international markets following years of profligate spending and falsifying financial data. The country is mired in a fifth year of recession, with unemployment spiralling above 22% and tens of thousands of businesses shutting down.
Greece had to agree to austerity measures to get its bailout. Measures included deep spending cuts on everything from healthcare to education and infrastructure as well as tax hikes and cuts in salaries and pensions. Anger at the measures has sent Greeks into the streets in frequent strikes and protests, some of them violent.
Some analysts said the election results could overstate the willingness of Greeks to embrace austerity. "Overall, the Greek election result, while welcome, does not imply that the Greek people are embracing the tough reforms tied to the bailout package. It merely meant that fear overruled anger," analysts at DBS Bank in Singapore wrote in a market commentary.