Singapore: Asian shares rose, with Japanese stocks hitting a seven-week high, and the euro clung to gains on Wednesday on optimism the risk is decreasing slightly that Greece will be the first euro zone country to default on its debt.
There was increased demand for riskier assets such as equities and commodities, and financial bookmakers predicted major European indexes would open around 0.5% higher.
“There’s some cautious optimism ahead of the Greek votes this week,” said Hiroaki Osakabe, a fund manager at Chibagin Asset Management in Tokyo.
“But we’re also seeing a lot of month-end window dressing and portfolio tweaking by hedge fund managers ahead of the end of their first-half earnings report.”
Japan’s Nikkei rose 1.5% and MSCI’s index of Asia Pacific shares outside Japan gained 1.2%, led by a 2.2% rise for the materials sector.
Sentiment was also buoyed by gains of more than 1% in US markets overnight, though low volumes indicated underlying nervousness there.
The first vote on Greece’s five-year austerity plan was due later on Wednesday, with further technical votes expected on Thursday.
The package, which has provoked violent demonstrations on the streets of Athens but won crucial political support on Tuesday, is needed to secure a new tranche of EU/IMF funds to prevent Greece becoming the first developed nation in more than 60 years to default on its debts.
Some analysts cautioned that any respite was likely to be temporary, with many doubts remaining over whether Greece can ever repay its 340 billion euro debt mountain and European leaders can stop other countries from slipping deeper into crisis.
“Greece cannot be salvaged,” Viktor Shvets, head of research and chief strategist at Samsung Securities Asia, told Reuters Insider TV.
“Neither, for that matter, can Portugal, Ireland, Spain and potentially Italy, at the end of the day they might need to exit the euro, but for the time being, at least in the short to medium term, the crisis is largely passed.”
The euro bought around $1.4362, having risen close to $1.44 in US trading hours, well above this week’s trough around $1.41.
“Traders should be careful of sharp euro volatility ahead of what promises to be a contentious vote that may decide whether Greece avoids default,”