Optimism on Greek bailout could push Asian markets higher

Asian stocks are set to open flat today, perhaps slightly higher if the news out of European remains one of optimisms around Greece getting its second bailout package. If the opposite, markets could give back some of yesterday’s gains.

US markets were closed for a public holiday. The Euro Stoxx 50 index was up around 1.2% on the Greece news and China’s moves yesterday to reduce reserve requirements for banks.

In commodities, gold was mostly flat at US$1734/oz. Copper was also mostly unchanged, last at US$3.75/lb, off its highs above US$3.90/lb booked earlier this month but with support around the US$3.60-3.65/lb level should traders sell the fact that China has moved.

In currencies, the Euro was pointing to optimism around debt negotiations, rising back above 1.32 against the US dollar to last settle at 1.3242. The Australian dollar gave back some of yesterday’s gains but remains just shy of 1.08 against the US dollar. The Japanese Yen continues to weaken but the US dollar can’t manage to crack the 80 level for the time being.

Regional traders will be closely eyeing mining companies, which have a high correlation to the level of economic growth, particularly those with exposure to the Chinese economy where expectations are now that the government will start to slowly and patiently support higher growth.

BHP, Rio Tinto and Fortescue Metals are the key names to watch in Australian trading. Japanese and South Korean exporters will be in focus as their prospects into China improve, so too will be luxury brand names and financial institutions listed in Hong Kong, like China Life for example.