Asian stocks rally on Greek bailout; Australian central bank says there is room for rate cut
City Index February 21, 2012 10:30 AM
<p>Asian stocks rallied on the back of news coming out of Europe that finance ministers have agreed to a Greek bailout which will remove any […]</p>
Asian stocks rallied on the back of news coming out of Europe that finance ministers have agreed to a Greek bailout which will remove any risk of a default next month. While the package does not remove the underlying structural and debt issues, it does provide a short term solution which will eases market concerns of a disorderly default.
The Euro bounced on the news by around one cent against the US dollar to last trade at 1.3260, down slightly but still well up on its intra-day levels.
The debt deal will see around 100 billion Euros written off and a target for the swap offer on current bonds to run from mid February to early March. For now, the situation is under control.
Elsewhere across the region, the Australian dollar fell slightly against the US dollar, drifting ahead of the European announcement, after the Reserve Bank of Australia said there was a case to cut rates in February but opted to await further economic data.
The news counters some suggestions that Australia’s central bank had perhaps changed course from its recent cuts, citing inflation and strong employment. The door is open for the RBA to respond based on the situation on the ground and the Australian dollar, having enjoyed a strong run, is now giving up some of its recent gains. It still remains in an upward trend against major peers.
In commodities, gold was mostly unchanged following the European news to last trade at US$1735/oz. Volatility has reduced in the metal over the past few weeks. Copper edged slightly higher but remains near US$3.78.lb, still below highs hit earlier this month.
Elsewhere in Asia, China’s second largest wireless operator of phone services – China Telecom Corp – said it will commence offering Apple’s iPhone 4S handset – a further endorsement of the brand in the emerging economy. Shares in China Telecom were up slightly in Hong Kong trading.
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