Asian stocks rallied on Monday, as a narrow election victory for Greece's pro-bailout parties which favor austerity measures required to stay in the eurozone eased investor fears about contagion from the country's political and economic turmoil.
Antonis Samaras, the leader of the conservative New Democracy party, who is tipped as the winner of Sunday's election pledged to honor Greece's commitments to its euro zone partners but said he wants to ease some aspects of the multi-billion-dollar EU-IMF bailout package that has imposed harsh austerity on many Greeks.
Commodities erased early gains and the euro struggled to extend gains after briefly hitting a one-month high against the dollar after Syriza's leader Alexis Tsipras said his party would not take part in the government, but will push through its agenda to cancel the terms of Greece's bailout agreements and repeal the austerity measures.
Investor focus is also shifting from Greece to key economic events, including the G20 Summit about to get underway later today and the Fed's policy-setting meeting on June 19 before a full European Union summit in Brussels on June 28-29.
Japan's Nikkei index surged up 1.8 percent to its highest level since May 22, as Greece's election results alleviated fears about a further turmoil in the 17-nation currency block. The broader Topix index rose 1.7 percent. Export-oriented electronics manufacturers led the broad-based rally as the yen fell across the board in the wake of improved risk sentiment. Toyota Motor rose 2 percent, TDK rallied 3.6 percent, Sony and Sharp climbed 4.2 percent and 5.6 percent, respectively and Mazda Motor soared 6 percent.
Resource stocks advanced in tandem with the rise in commodity prices. JFE Holdings rose 3.8 percent, Kobe Steel rallied 4.4 percent and Inpex jumped 4.2 percent. In the financial sector, Sumitomo Mitsui Financial Group Nomura Holdings, Mizuho Financial Group and Dai-ichi Life Insurance Co jumped 2-5 percent. Electricity producers lost ground, with Chugoku Electric Power and Kansai Electric Power dropping 1-2 percent, on concerns that a sharp weakening of the yen will increase the cost of imported fossil fuels.
China's Shanghai Composite index rose 0.4 percent, led by cement producers and property developers on hopes of a pickup in construction activity after a government survey showed housing prices in the 70 Chinese cities eased by a marginal 0.12 percent on average in May from a month earlier, compared with 0.25 percent decrease in April and 0.29 percent fall in March. Hong Kong's Hang Seng index rose a percent.
Australian shares rallied as investors breathed a sigh of relief that the election victory of Greece's pro-bailout New Democracy party would reduce the immediate risks of a eurozone break-up. The benchmark S&P/ASX 200 index climbed 2 percent, while the broader All Ordinaries index jumped about 1.9 percent.
Miners led the gainers, with BHP Billiton up 2.5 percent and Rio Tinto climbing 4.6 percent, after copper prices hit a three-week high in London. Rare earths miner Lynas Corp jumped 6.3 percent after the Malaysian government dismissed an appeal against a temporary operating license for its controversial new plant.
Banks also performed well, with NAB gaining 3.1 percent, while Commonwealth, Westpac and ANZ rose 1-2 percent. Shares of Fairfax Media soared 7.4 percent after unveiling plans to cut 1900 jobs over the next three years as part of a major restructuring.
South Korea's Kospi average ended 1.8 percent higher in a relief rally after the Greek poll results. Economy-sensitive automakers, steelmakers and shipbuilders led the gainers with Posco, Hyundai Motor and Samsung Heavy Industries climbing 2-5 percent, while defensive stocks such as Dongwon Industries came under selling pressure due to increased risk appetite.
New Zealand shares rose, led by online auction site Trade Me after its parent Fairfax Media offloaded a chunk of shares in the company to help pay for a business restructuring that aims to cut 1,900 jobs. Trade Me shares climbed 5.6 percent, lifting the benchmark NZX-50 index up a modest 0.3 percent. Xero and Diligent fell over a percent each on their debut in the benchmark index.
Fletcher Building rose 0.2 percent after naming Mark Adamson as new chief executive to replace Jonathan Ling. Nuplex Industries, the specialty chemicals maker, eased 0.4 percent as it raised $105 million by tapping the U.S. private placement market. Gold miner Oceanagold tumbled 3.4 percent after gold fell for the first time in seven sessions on Monday following the victory of pro-bailout parties in Greek elections.
Elsewhere, India's benchmark Sensex was last trading down 1.6 percent after the Reserve Bank of India unexpectedly left interest rates and the cash reserve ratio for banks unchanged, saying that another rate cut could exacerbate inflationary pressures.
Indonesia's Jakarta Composite index rose 1.1 percent, Malaysia's KLSE Composite edged up 0.2 percent, Singapore's Straits Times index added half a percent and the Taiwan Weighted average jumped 1.8 percent.
U.S. stocks posted strong gains on Friday as separate reports showing an unexpected drop in industrial production in May and a substantial deterioration in consumer sentiment increased the likelihood of further monetary stimulus coming out the Federal Reserve. The Dow rose 0.9 percent, the tech-heavy Nasdaq climbed 1.3 percent and the S&P 500 added a percent.
by RTT Staff Writer
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