Asia-Pacific bourses extends rally on optimism that Greece's problem is solved in near term

Asia-Pacific bourses ended last trading session of month as well as June quarter with positive spirit, as risk hunger investors continued hunting for blue chip stocks on relief over Greece's debt crisis after the Greek austerity package has been passed in Athens and on news reported US home sales rose over 8% in May. Meanwhile, overnight rally in the European and United State equity market, and commodity prices also uplift risk appetite for equities.

Most risk assets performed well overnight, with oil was up more than 2% after EIA crude inventory fell deeper than expected and the US Dollar Index edged down on higher risk demand. Copper closed at $9,320/ton, a highest price since May 4, on the London Metal Exchange.



Greece's Parliament had passed the five-year austerity plan yesterday amidst nationwide massive protest. The bill passed with 155 votes for and 138 against in the 300 strong assemblies.

The passage of austerity measures moved Greece one step closer to containing its debt crisis. Greece promised an additional 28.4 billion euro in spending cuts and new taxes was set as a condition for another international bailout fund amounting to110 billion euro. However, the Greek government still has to secure a further vote today on the implementation of the measures before it can receive more loans from the European Union.

The dollar index, a measures of the performance of the U.S. unit against a basket of six currencies, slipped almost 0.5% to 74.32 from 74.68 late Wednesday. Greenback weakened against major currency partner as dampening demand for safe heaven units on easing uncertainty over Greece austerity approval plan to secure financial aid and avoid a debt default. Meanwhile mounting hopes of interest rate hike by European central bank sent euro to a three-week peak in Asian trades against the US dollar.

However, market is expected to take back foot in coming month as focus is back to the fragility of US recovery as well as IMF's warning to US for raising the debt ceiling.

US economic reports reinforcing the view that the recovery is in a “soft patch”. IMF warned the US to raise the debt ceiling or it would risk causing a ‘severe shock' the world economy.

IMF said in its annual report on US economy that the federal debt ceiling should be raised expeditiously to avoid a severe shock to the economy and world financial markets.

S&P said that it would downgrade US Treasury bills to D rating if the government misses a payment of $30 billion on August 4, when the bills mature. Indeed, Fitch Rating and Moody's said earlier this month they would downgrade the country's rating should the raise of debt ceiling fail.

Back to equity market, Australian bourses ended last trading session of June as well as of the financial year with positive spirit, with the benchmark All Ordinaries spurted 1.75% and the S&P/ASX200 index climbed 1.73%, registering third day of winning streak.

Meanwhile, optimism that Chinese policymakers won't be too aggressive in monetary tightening in the second half have sent the China's benchmark Shanghai Composite index 1.23% higher at 2,762.08, a highest level in more than 5-weeks.

At the meantime, the Tokyo shares also ended with modest gains, with the benchmark Nikkei Stock Average was up 0.2% while broader Topix index put on 0.61%, as investors returned to the market late afternoon following initial profit booking to chase high yield stocks as fears of a Greek debt implosion recede for the meantime. Meanwhile, upbeat data on housing starts weaker yen against euro also uplift buying.

The Land Ministry said today that Japan's housing starts rose for the second straight month in May, up 6.4% on the year to 63,726 units.

Coming to India's, the BSE benchmark Sensex extended its gains for the sixth day by adding another 0.63% at 18,812.05, as funds and retail investors engaged in enlarging their positions, taking cues from the firming trend on other Asian bourses. Meanwhile, investors covering their short positions on the last day of June month settlement in the derivatives segment also fuelled the uptrend.

Among other Asia-pacific bourses, the key benchmark indices in Indonesia, Singapore, Hong Kong's, South Korea, New Zealand, and Taiwan were up by between 0.3% to 1.7%.