Asia Rallies, Greece Shows Promise.
Asian markets rally upon opening
The Asian markets opened this morning and instantly rose sharply in reaction to reports released on Friday that the US had created 163,000 new jobs in July – a five month high. The signal of growth from the worlds biggest economy combined with the softening of sovereign bond yields in the EU is expected to drive markets across the globe.
The news that Italy and Spain had their sovereign bonds softened has lead to many feeling confident that the Eurozone will no longer fall into a financial meltdown, although it is by no means stable yet. The Managing Director of Lyncean Holdings, Francis Lun summed up the situation by saying “I think people are no longer worried that the eurozone will collapse, so confidence has returned to the market”.
News from a source closer to home for the Asian markets also came out of the People’s Bank of China over the weekend. A statement from the bank insisted that its policies would be fine tuned in a bid to help the country continue its impressive economic growth.
Japan’s Nikkei 225, South Korea’s Kospi and Hong Kong’s Hang Seng all raised by 2%. Australia’s Standard and Poor also rose by 1.1%, in addition to rallies in China, Thailand, Taiwan and Singapore.
The biggest individual gains were made by Asia’s big exporters, such as car manufacturers and producers of electronics among others. The only big exception to this was Sharp Corp, where stocks fell 4.7%. Mazda Motor Corp. saw a rise of 4.5% and Isuzu Motors Ltd climbed a staggering 5.9%. Drink manufacturers Kirin Holdings Co. also went up by 3.6%, leading the way for companies producing food and drink.
As the European markets open we expect to see more growth, with Wall Street also expected to continue the rally that started it all on Friday.
Greek Recovery Looking Promising
Greece has shown some good signs of recovery in the six weeks since Antonis Samaras took over with his conservative government. They have quickly taken steps to cut costs and spur the economy on. There is talk of mass privatisation, which would reduce the burden on the Greek national budget and appease many of their creditors.
Auditors have recently visited the country and left praising of the government’s approach to the current crisis they face, feeling that they finally have someone in power who acknowledges the severity of the situation and the cuts required to get them out of it. The EU-IMF officials have been touring the nation to ensure that the agreed measures have been taken by the Greeks and executed in an effective fashion.
With a €3.2bn bond maturing at the end of the month and the national purse bordering on empty Athens faces an uphill challenge to make the necessary payments, so the words of praise from the IMF will be more valued than ever should they look to seek an extension of some form. Samaras and his team are willing to do “whatever it takes” to regain control of their economy and the nation’s credibility. The positive audit will also improve their chances of getting another installment of aid in September, believed to be worth €31.5bn.