Euro, Asia Stocks Drop on Greek Debt Concerns; Oil, Copper Fall
Euro Weakens Amid Greece Election Concern
Chris Ratcliffe/Bloomberg
The euro declined versus 11 of its 16 most-traded peers before Greece resumes debate on a confidence motion for Greek prime minister George Papandreou’s government.
The euro declined versus 11 of its 16 most-traded peers before Greece resumes debate on a confidence motion for Greek prime minister George Papandreou’s government. Photographer: Chris Ratcliffe/Bloomberg
June 20 (Bloomberg) -- Bloomberg's Deborah Kostroun reports on the performance of the U.S. equity market today. U.S. stocks rallied, sending the Standard & Poor’s 500 Index up for a third straight day, as Luxembourg’s Jean-Claude Juncker assured investors that a solution will be found to Greece’s debt crisis. Bloomberg's Pimm Fox also speaks. (Source: Bloomberg)
June 20 (Bloomberg) -- Notis Mitarachi, alternate head of economic policy for Greece's New Democracy party, discusses the country's debt woes and austerity measures. Mitarachi speaks with Maryam Nemazee on Bloomberg Television's "The Pulse." (Source: Bloomberg)
June 20 (Bloomberg) -- Henry Kaufman, president of Henry Kaufman & Co. and former chief economist at Salomon Brothers, talks about the outlook for U.S. banks. Kaufman also discusses International Monetary Fund Acting Managing Director John Lipsky, Federal Reserve monetary policy and investment strategy. He speaks with Tom Keene on Bloomberg Television's "Surveillance Midday." (Source: Bloomberg)
June 20 (Bloomberg) -- Liam Dalton, president and chief executive officer of Axiom Capital Management Inc., talks about factors affecting the U.S. stock market and investment strategy. Dalton speaks with Deirdre Bolton on Bloomberg Television's "InsideTrack." (Source: Bloomberg)
June 20 (Bloomberg) -- Joergen Moeller, visiting senior research fellow at the Institute of Southeast Asian Studies, talks about the delay by European governments on releasing a loan payment to spare Greece from default. He speaks from Hong Kong with Linzie Janis on Bloomberg Television's "First Look." (Source: Bloomberg)
June 20 (Bloomberg) -- Hans Humes, president of Greylock Capital Management, discusses Greece's debt crisis and the prospects for restructuring its debt. He speaks on Bloomberg Television's "InBusiness With Margaret Brennan." (Source: Bloomberg)
June 20 (Bloomberg) -- Nick Maroutsos, a portfolio manager and co-founder at Kapstream Capital, talks about global currencies. Maroutsos also discusses the sovereign debt crisis in Euorpe and the outlook for U.S. Treasuries. He speaks from Sydney with Rishaad Salamat on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)
Jan. 20 (Bloomberg) -- Stephen Davies, chief executive officer of Javelin Wealth Management Ltd. in Singapore, talks about the global economy and financial markets. Davies speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
June 20 (Bloomberg) -- Neil MacKinnon, an economist at VTB Capital Plc, talks about the outlook for the Greek debt crisis after European governments failed to agree on a payment to spare the country from default. MacKinnon, speaking with Deirdre Bolton on Bloomberg Television's "InsideTrack." (Source: Bloomberg)
The euro slid, starting a third week of losses, and Asian stocks fell for a fourth day after European governments failed to agree on a loan payment to avert Greek default. Oil and copper led commodities lower.
Europe’s shared currency weakened 0.6 percent to $1.4225 and retreated for a fourth day against the yen as of 3:02 p.m. in Tokyo. The MSCI Asia Pacific Index slipped 0.6 percent, bound for the lowest close in three months. Futures on the Standard & Poor’s 500 Index decreased 0.7 percent, while those on the Euro Stoxx 50 Index slumped 1.2 percent. Crude declined 1.5 percent in New York, while copper sank 1.1 percent in London.
Euro-area finance ministers put off a decision on whether Greece will get the full 12 billion euros ($17.1 billion) promised for July as they pushed for budget cuts by Prime Minister George Papandreou, whose government faces a confidence motion this week. Stocks earlier gained as companies from Mazda Motor Corp. (7261) to Olympus Corp. (7733) forecast improving profits amid a sell-off that has dragged valuations for the MSCI Asia Pacific Index down to the lowest level in almost three months.
“While Greece may have invented democracy, they certainly didn’t invent stability so you could see further pressure on the euro,” Nick Maroutsos, a money manager and co-founder at Kapstream Capital, said in a Bloomberg Television interview from Sydney. “They need to start implementing stronger austerity measures but it’s increasingly difficult given the social unrest and the political volatility that they’re facing.”
Confidence Motion
The euro slid against 11 of its 16 most-actively traded counterparts and declined 0.3 percent to 114.14 yen. Papandreou began a three-day debate yesterday on a confidence vote in his new government as he sought parliamentary approval for a 78 billion-euro ($111 billion) package of budget cuts. Antonis Samaras, leader of New Democracy, the largest opposition party in Greece, repeated his call for elections.
Euro-area finance ministers will decide on a new financing strategy for Greece by early July, the group said in a statement distributed to reporters in Luxembourg after talks. The Australian dollar lost 0.8 percent to $1.0533 while New Zealand’s currency slid 0.8 percent to 80.63 U.S. cents.
“They’ll come up with a short-term financing deal, which will answer the immediate funding issues,” Stephen Davies, chief executive officer of Javelin Wealth Management Ltd., said in a Bloomberg Television interview in Singapore. “But as far as resolving the really long-term issues, as in how on earth Greece and the Greek people afford the interest payments and principal repayments without cratering the economy, that’s going to be left for a later day.”
Dollar, Treasuries
The Dollar Index, which tracks the U.S. currency against those of six major trading partners, added 0.5 percent. Yields on 10-year Treasuries climbed two basis points to 2.93 percent, heading toward the lowest level this year. Home sales probably dropped in May to the lowest level this year, while orders placed with factories gained, economists said before reports this week. The S&P 500 climbed 0.3 percent on June 17, leaving the index little changed for the week.
MSCI’s Asia Pacific Index is extending seven consecutive weekly declines, the losing streak since 2004. Last week’s drop drove the index’s valuations to 14.2 times reported earnings, the lowest level since March 30.
Mazda Motor jumped 2.1 percent after the automaker forecast it will return to profit in the year ending March 31. Olympus increased 4.3 percent after the optical-equipment maker forecast profit may more than double. Caltex Australia Ltd. (CTX), the nation’s biggest oil refiner, dropped 6.7 percent after it forecast a drop in first-half operating profit because of plant disruptions and higher crude prices.
‘Further Falls’
“Shares are starting to look good value,” said Shane Oliver, head of investment strategy at AMP Capital Investors Ltd, said in an e-mailed note. “But given the list of worries, you can’t rule out further falls. Europe and other issues mean there are still a lot of balls in the air, and still a lot of worries bubbling away in the background.”
The Bombay Stock Exchange Sensitive Index sank 1.4 percent after the Business Standard reported India’s government sought to tax capital gains on investments routed through Mauritius.
China’s Shanghai Composite Index fell 1.1 percent, bound for the lowest close in almost nine months, after Credit Suisse Group AG said the country is heading for a “sluggish landing” as economic growth slows and bank risks rise. Bank of China Ltd. and Agricultural Bank of China Ltd. (601288) slipped after the brokerage cut its recommendation on the shares.
Twelve-month non-deliverable yuan forwards fell to 6.3824 in Shanghai, compared with 6.3745 yuan at the end of last week, according to data compiled by Bloomberg. The possibility of a large appreciation of the yuan is small, the official Xinhua News Agency reported yesterday, citing an unidentified person.
Oil for July delivery slipped 1.5 percent to $91.65 a barrel on the New York Mercantile Exchange, retreating for a second day. Futures fell 2 percent on June 17, capping a 6.3 percent weekly slump that was the steepest since the period ended May 6. Copper for three-month delivery lost 1.1 percent to $8,998 a metric ton on the London Metal Exchange. Nickel, aluminum and lead also declined.
To contact the reporter on this story: Shiyin Chen in Singapore at schen37@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
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