Monday 05 Jun 2023
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WELLINGTON/TOKYO (Feb 17): Asian stocks and U.S. index futures retreated as the euro extended losses versus major currencies after talks between Greece and its creditors broke down. Treasuries and Australian debt rallied, while oil held gains.

The MSCI Asia Pacific Index dropped 0.1 percent by 9:58 a.m. in Tokyo, with Japan’s Topix index slipping 0.2 percent as the yen climbed to a one-week high against the euro. The 19- nation region currency sank at least 0.2 percent against 13 of 16 major peers. Standard & Poor’s 500 Index futures declined 0.5 percent from Feb. 13, with U.S. markets closed Monday for a holiday. Ten-year Treasury yields dropped four basis points from Friday, while similar-maturity Australian bond rates lost three basis points. U.S. oil was steady at $52.80 a barrel.

Discussions in Brussels ended abruptly Monday, with Greece rejecting as “absurd” and “unacceptable” a euro-area proposal to extend the nation’s existing bailout conditions. Failure to strike a deal by Feb. 28, when the current aid expires, risks putting Greece’s euro membership in jeopardy. Doubt over Chinese demand for raw materials was one of the reasons behind Australia’s recent rate cut, central bank minutes showed Tuesday. China will report on property prices.

“Markets recognized the discussions were going to be difficult, so I don’t think this changes people’s expectations dramatically,” Angus Gluskie, managing director at White Funds Management in Sydney where he oversees about $550 million, said by phone. “But it is a key point of uncertainty for investment markets, so it’s likely to mean that investors will continue to be cautious.”

Japanese Moves

The Topix dropped from its highest close since December 2007 as the yen gained as much as 0.4 percent versus the euro to 133.94, the common currency’s weakest level since Feb. 9.

The yen has been rallying with central bank policy makers said to view further monetary easing as counterproductive for now. More stimulus could trigger losses in the currency that would damage confidence, people familiar with the Bank of Japan’s discussions said last week. The BOJ starts a two-day policy meeting Tuesday.

The euro dropped 0.2 percent to $1.1329, falling for a third day versus the greenback.

The Greek government accused Eurogroup Chairman Jeroen Dijsselbloem of backtracking on an agreement he made last week with Prime Minister Alexis Tsipras.

The European Union’s commissioner for economic and monetary affairs, Pierre Moscovici, had put forward a draft statement ahead of the meeting that Greece was ready to sign up to, Greek Finance Minister Yanis Varoufakis told reporters after the talks. When finance ministers gathered Dijsselbloem put forward a different text that the Greeks could not accept.

Treasuries Rally

Without a deal, Greece could run out of money by the end of March, forcing Tsipras to consider abandoning his promises to the electorate or even leaving the single currency.

Benchmark 10-year U.S. Treasuries yielded 2.02 percent after rates rose in six of the past seven trading sessions. Australian bonds due in a decade yielded 2.52 percent, little changed after the RBA minutes also cited doubt over a pickup in domestic spending for the bank’s decision to reduce the nation’s key rate to a record-low 2.25 percent Feb. 3.

Australia’s S&P/ASX 200 Index fell 0.3 percent as Australia & New Zealand Banking Group Ltd. dropped the most intraday since November after reporting an increase in bad debt charges and falling loan margins.

Markets in India, Sri Lanka, Taiwan and Vietnam are closed for holidays Tuesday, with mainland China to shut from Wednesday for the week-long New Year break.

Oil Markets

West Texas Intermediate crude was little changed from Friday’s close at $52.80 a barrel. WTI floor trading was suspended Monday for the Presidents’ Day holiday in the U.S., with transactions to be booked Tuesday for settlement purposes.

Crude has rallied the past three weeks as U.S. drillers cut the number of rigs in service to the fewest since August 2011, according to data from Baker Hughes Inc. The slowdown in U.S. drilling is still not sufficient to achieve the slowdown in production growth required to balance the oil market, Goldman Sachs Group Inc. said in an e-mailed report Monday.

Copper futures expiring in May slipped 0.1 percent to $2.6040 on the Comex from Friday’s close.

One-month ruble forwards were up 0.6 percent at 64.0125 per dollar after the currency climbed on Monday and Russian stocks declined.

Fighting subsided along most of the front line in Ukraine as world leaders urged all sides to adhere to an agreement signed last week in Minsk, Belarus.

While the cease-fire showed signs of holding, the European Union went ahead with plans announced last week to impose restrictions on an additional 19 people and nine organizations in Russia. Russian Deputy Defense Minister Anatoly Antonov was the highest-ranking official to be included on the expanded blacklist.







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