Shanghai bounces from slump, while euro heads higher
People walk past Japan’s Nikkei stock index displayed on an electronic board in Tokyo on May 28, 2015. Shanghai stocks recovered from a huge plunge to end higher Thursday, June 4, while Tokyo’s early gains wilted to almost nothing but the euro ticked up after Greece and its creditors held debt-reform talks. AP PHOTO/SHUJI KAJIYAMA
HONG KONG–Shanghai stocks recovered from a huge plunge to end higher Thursday while Tokyo’s early gains wilted to almost nothing but the euro ticked up after Greece and its creditors held debt-reform talks.
The dollar edged up following a broadly upbeat round of reports on the US economy as investors look ahead to the release Friday of key US jobs data.
Shanghai slumped 5.2 percent at one point after a brokerage imposed restrictions on margin borrowing, limiting a crucial avenue of cash that has helped fuel a surge in mainland markets of the past year.
However, it clawed back the majority of those losses to end 0.76 percent higher, adding 37.12 points to 4,947.10–its highest since January 2008.
However, Hong Kong ended down 0.38 percent, or 105.58 points, at 27,551.89. Sydney tumbled 1.42 percent, or 79.30 points, to 5,504.30 for a fourth straight loss.
Tokyo was marginally higher, adding 14.68 points to 20,488.19 and Seoul edged up 0.47 percent, or 9.70 points, to 2,072.86.
US shares ended Wednesday on a high note after following figures showing solid growth in private-sector job hiring and a healthy outlook on the economy in the Federal Reserve’s latest update.
In its closely watched Beige Book, the Fed said the world’s No. 1 economy returned to modest-to-moderate growth in April and May after stalling in the first three months of the year, partly because of severe winter weather.
On Wall Street the Dow added 0.36 percent, the S&P 500 rose 0.21 percent and the Nasdaq put on 0.45 percent.
In Japanese currency trade Thursday the dollar was at 124.33 yen compared with 124.23 yen in New York, and well up from 123.90 yen in Tokyo earlier Wednesday.
Equity buying was also supported by comments from European Central Bank chief Mario Draghi, who said its new stimulus program of bond-purchasing had begun to kick and there were no plans to end it early.
The ECB also projected eurozone inflation would reach 0.3 percent in 2015, up from its previous forecast of flat prices, while it kept its 2016 forecast at 1.5 percent and its 2017 forecast at 1.8 percent.
‘Very good meeting’
Data Tuesday showed inflation in the bloc rose in May for the first time in five months, fueling hopes a recovery is taking shape.
The euro was at $1.1283 and 140.25 yen on Thursday compared with $1.1270 and 140.01 yen in US trade.
The single currency is holding up as investors track talks in Brussels between Greece and its creditors on overhauling its bailout ahead of a Friday deadline for it to repay some of its debt.
While a meeting between Prime Minister Alexis Tsipras and European Commission chief Jean-Claude Juncker ended late Wednesday without a breakthrough, they agreed to continue discussions that would unlock billions in much-needed cash for Greece.
Eurogroup chief Jeroen Dijsselbloem, who also attended the four-hour talks, told reporters it was a “very good meeting.”
And the European Commission–the executive arm of the European Union and one of Greece’s three bailout monitors along with the IMF and ECB–said: “It was a good, constructive meeting. Progress was made in understanding each other’s positions on the basis of various proposals.”
There are fears that if Athens defaults on its debt obligations it could eventually leave the eurozone.
“It would be quite a surprise if they didn’t reach an agreement on Greece,” Keith Poore, head of investment strategy at AMP Capital Investors in Wellington, told Bloomberg News. “There’s scope for equities to rise further.”
Oil prices were lower. US benchmark West Texas Intermediate for July delivery fell 18 cents to $59.46 while Brent eased 16 cents to $63.64 in afternoon trade.
Gold fetched $1,183.30 compared with $1,189.20 late Wednesday.
In other markets:
— Taipei shed 2.18 percent, or 207.89 points, to 9,348.63.
Taiwan Semiconductor Manufacturing Co. lost 1.40 percent to Tw$141.0 while Hon Hai Precision Industry fell 2.58 percent to Tw$94.5.
— Wellington rose 0.11 percent, or 6.74 points, to 5,865.44.
Contact Energy was up 0.33 percent at NZ$6.08 and Spark fell 1.21 percent to NZ$2.855.
— Manila closed 0.11 percent, or 8.02 points, lower at 7,553.65.
Ayala Corp. was down 1.16 percent at 767 pesos and Ayala Land fell 0.64 percent to 39.10 pesos but Manila Electric jumped 2.57 percent to 287 pesos.
— Bangkok closed up 0.60 percent, or 8.83 points, to 1,490.90.
Kasikorn Bank rose 2.05 percent to 199 baht, while oil company PTT fell 0.88 percent to 337 baht.
— Jakarta ended down 0.68 percent, or 34.68 points, at 5,095.82.
Indonesia-based oil palm company Dharma Satya Nusantara gained 2.44 percent to 4,200 rupiah, while Indonesia-based coal miner Indo Tambangraya Megah fell 4.11 percent to 12,825 rupiah.
— Kuala Lumpur closed down 0.44 percent, or 7.69 points, at 1,741.48.
Hong Leong Financial Group rose 1.79 percent to 15.90 ringgit, and Kuala Lumpur Kepong gained 1.43 percent to 22.70 ringgit, but IOI Corp. lost 2.44 percent to end at 4 ringgit.
— Singapore fell 0.14 percent, or 4.84 points, to 3,345.00.
Oversea-Chinese Banking Corporation fell 0.40 percent to Sg$10.00 while Singapore Airlines declined 1.46 percent to Sg$10.84.
— Mumbai fell very marginally by 0.09 percent, or 23.78 points, to end at 26,813.42.
Tata Steel fell 2.58 percent to 308.25 rupees, while Reliance Industries rose 1.85 percent to 912.50 rupees.
