Markets

Euro, stocks wary ahead of Greece meetings

Reuters Paris | Updated on January 24, 2018 Published on February 11, 2015

European stocks and the euro fell on Wednesday while the dollar edged higher as euro zone meetings on the Greek debt crisis threatened to give rise to confusion rather than clarity.

Euro zone finance ministers will meet on Wednesday and EU leaders on Thursday, but officials are already playing down chances of a breakthrough.

European shares inched lower, led by a 3.8 per cent drop in Greek shares, while the euro and bonds from Greece, Portugal and Ireland also dipped.

Greece bailout

New Greek Finance Minister Yanis Varoufakis will spell out a plan to drop his country’s bailout and end austerity at the meeting in Brussels, and seek a temporary agreement to buy time until June for a properly negotiated settlement.

The rest of the euro zone led by Germany, however, is sticking to the view that Athens needs to push on with spending cuts and privatisations if funding support is to continue.

“We have relatively low expectations about a solution being agreed,’’ said Vasileios Gkionakis, UniCredit’s Global Head of FX Strategy.

“I think this meeting is all about laying down the plans and explaining where the two sides disagree. And I think it will set the stage for some increased volatility over the next few days.’’

Dollar vs other currencies

As the euro sagged to $1.1313 under the Greek uncertainty, the dollar remained firm as traders continued to bet on the first US interest rate hike in almost a decade later this year.

The dollar hit a one-month high against the yen of 119.77 bolstered by a recent rise in Treasury yields — a reflection of rate hike expectations.

Asian markets

Trade was thin, though, with Japanese markets closed for a public holiday.

MSCI’s broadest index of Asia-Pacific shares outside Japan ended off 0.3 per cent. Australia’s main index slipped 0.6 per cent to offset a 0.2 per cent gain for shares in Shanghai.

In commodity markets, US crude futures bounced 40 cents to $50.42 a barrel on news of a smaller-than-expected rise in crude inventories. Brent crude gained 25 cents to $56.71, having shed $1.91 on Tuesday.

Traditional safe haven gold rose 0.3 per cent to $1,237.70 an ounce, reversing a similar drop on Tuesday, while copper climbed to $5,657 a tonne as traders prepared to wind down for the Lunar New Year in the metal's biggest market, China.

Ukraine crisis

The rouble fell before talks between Russia, Ukraine, France and Germany in Belarus aimed at bringing an end to fighting in eastern Ukraine, with analysts predicting volatile trading.

Ahead of the meeting, Ukraine said 19 soldiers had been killed in rebel attacks near the strategic town of Debaltseve, while rebel representatives denied an earlier report that a ceasefire had been agreed.

There was also move volatility in Nigeria, one of Africa’s largest economies. The naira lost more ground as it slipped to 202.75 to the dollar.

It has hit repeated record lows this week after a delay to presidential elections stirred concerns about political stability and amid fears about the central bank's ability to manage a currency hammered by weak oil prices.

Published on February 11, 2015
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