Asian markets rise on Wall Street lead
Hong Kong – Asian markets rose for a second straight day on Wednesday following a positive lead from Wall Street, while European Group of Seven members promised a speedy response to the continent’s debt crisis.
The euro edged slightly higher but traders remained nervous about the region’s uncertainty, with Standard & Poor’s warning there was a one in three chance Greece could leave the eurozone within months.
Tokyo rose 0.70 percent, Hong Kong added 0.60 percent, Shanghai climbed 0.37 percent and Seoul gained 1.05 percent, while Sydney was 0.15 percent higher.
Also providing some support was a report in the Wall Street Journal saying the Federal Reserve was again contemplating stimulus measures in the wake of weak data from Asia to Europe and the United States.
In an emergency teleconference Tuesday, the European members of the Group of Seven industrialized economies vowed to respond “speedily” to the crisis, according to Japanese Finance Minister Jun Azumi.
“We were able to share our recognition on the European issue,” he was quoted as saying by Jiji Press after the G7 ministers and central bank chiefs talked.
“The European side stated that they will respond to it speedily.”
And in comments on Wednesday morning he told reporters: “As the big aim is to overcome the crisis, Europe in particular needs to act appropriately and responsibly.”
European leaders are under mounting pressure to take bold steps at an end-June summit to save the euro as eurozone states buckle under the pressure of recession and debt.
The White House said it hoped for “accelerated” action in coming weeks ahead of a G20 summit in Mexico later in June.
Tuesday’s talks came after Spain asked for help for its under-pressure banking system in order to avoid a bailout.
Spanish Prime Minister Mariano Rajoy has called for a European banking union that would be able to provide aid to lenders, a move that was seeing support in France and at the ECB. Germany remains strongly opposed.
Another eurozone member Cyprus also warned there was a serious possibility it may need EU aid to save its banking system, which is heavily exposed to Greece.
Meanwhile Standard & Poor’s warned there was a one in three chance Greece will exit the eurozone in the months after June 17 polls, particularly if anti-austerity parties – who fared well in initial polls – were to win.
Such a move, it said, would likely lead to the rejection of stringent cost-cutting measures and reforms agreed to in exchange for a massive EU-IMF bailout.
That would lead to the rescue cash being cut off, which would “seriously damage Greece’s economy and fiscal position in the medium term and most likely lead to another Greek sovereign default”, it added.
On currency markets the euro bought $1.2475 and 98.20 yen in early Asian trade, compared with $1.2450 and 98.03 yen in New York late Tuesday. The dollar was at 78.70 yen against 78.72 yen.
In New York stocks ended higher after the Institute for Supply Management’s index on the services sector – which accounts for about 70 percent of the US economy – rose unexpectedly.
The ISM index rose to 53.7 percent in May from 53.5 percent in April, indicating a slightly faster growth rate. Expectations were for a decline.
The Dow rose 0.22 percent, the S&P 500 gained 0.57 percent and the Nasdaq Composite was 0.66 percent higher.
Oil prices rose in early trade. New York’s main contract, West Texas Intermediate crude for July delivery gained 30 cents to $84.59 a barrel and Brent North Sea crude for July rose 16 cents to $99.00.
Gold was down slightly to $1,625.80 an ounce at 0210 GMT, compared with $1,617.60 late Tuesday.
