Markets absorb Greece's bond market return
AP and AFP Friday, April 11, 2014, 12:02 am TWN
HONG KONG/LONDON--Markets in Europe traded in fairly narrow ranges Thursday as the successful return of Greece to bond markets following a four-year absence helped further steady the nerves following a turbulent start to the week.
Greece, the country at the forefront of Europe's debt crisis over the past few years, has managed to sell 3 billion euros (US$4.1 billion) of five-year debt at a yield below 5 percent. To put that in context, the rate Greece has had to pay is around half that which Russia has to pay for the equivalent debt and comes even though the country has yet to emerge from a savage recession and remains lumbered by a debt burden of around 175 percent of gross domestic product.
"Overall, this debt sale is a triumph in financial terms," said Kathleen Brooks, research director at Forex.com.
Brooks credited the success to a number of factors, including the so-called "Merkel Guarantee," a reference to the pledge made by German Chancellor Angela Merkel during the financial crisis to keep Greece from exiting the euro bloc.
Risks remain for Greece, notably on the political front. But even there, analysts noted signs that the vast majority of people in the country want to stay within the 18-country eurozone.
"Considering everything Greece has been through one could argue that it is surprising that there hasn't been more of an anti-European stance taken by the people," said Gary Jenkins, an analyst at LNG Capital.
One sign of the confidence in the Greece's economic prospects has been the sharp rally in Greek shares over the past few months alongside the slide in the interest rates on the country's openly-traded debt. Following the debt sale, the main stock market in Athens, the Athex, was down 0.2 percent at 1,290.
Elsewhere in Europe, the FTSE 100 index of leading British shares was up 0.1 percent at 6,642 while Germany's DAX fell 0.2 percent to 9,492. The CAC-40 in France was 0.2 percent lower at 4,433.
Asian Shares up After Wall St. Rallies on Fed Minutes
Asian markets rose on Thursday, taking their lead from a Wall Street rally after minutes from the U.S. Federal Reserve's latest policy meeting showed no support for an early rise in interest rates.
While early gains were pared after China said imports and exports fell sharply in March, Hong Kong and Shanghai were lifted by hopes of new government stimulus and news of a plan to increase access between the two cities' stock exchanges.
Tokyo ended flat, edging up 0.43 points to 14,300.12, and Seoul added 0.48 percent, or 9.66 points, to 2,008.61.
Sydney closed up 0.31 percent, or 17 points, at 5,480.8 after data showed unemployment had dropped in March below 6.0 percent.
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