The euro fell, touching the lowest level against the U.S. dollar
and Japanese yen in more than a decade, while Asian stocks and U.S.
futures tumbled after Greece's antiausterity Syriza party was
projected to win the country's national elections, fueling fears
about the future of the eurozone.
The European currency was down 0.3% against the U.S. dollar to
$1.1171, and earlier touched $1.1098, which was the weakest point
since Sept. 2003. In Japan, the Nikkei Stock Average was down 0.6%
to 17410.91 ahead of the open in Hong Kong where futures for the
Hang Seng were down 0.3%. Futures for U.S. stocks were down 0.8%,
while futures for West Texas Intermediate crude oil fell 1.5% to
under $45 a barrel in Asia trade.
The Syriza party was projected to win 150 seats out of the 300
in Greece's parliament, but it remained unclear whether the party
would need to find a coalition partner to form a government. The
victory has some analysts concerned that Greece could exit the
eurozone, setting a precedent for other countries and shaking up
financial markets.
"The signs that are appearing around Greece's elections are
throwing renewed doubt on the viability of the euro," says Hiroyuki
Fukunaga, chief executive officer at Investrust, an asset
manager.
Sam Stovall, U.S. equity strategist at S&P Capital IQ, said
investors signaled some concern on Friday, when U.S. stocks sold
off after four sessions of gains. "Investors just decided to take
gains from Thursday, pocket them because who knows what's going to
happen on Sunday," Mr. Stovall said.
But some investors said the election would have a minimal effect
on the markets, asserting that any contagion should be short-lived
and expressing doubt that Greece would abandon the euro. Some
strategists said fourth-quarter corporate earnings would be more
important for the stock market than the outcome of Sunday's
election in Greece.
Losses in Asia were muted with Australia's market closed for a
national holiday. Stocks in New Zealand were up 0.3% while Malaysia
was down 0.2%.
The launch of a massive stimulus program by the European Central
Bank on Thursday is expected to keep money flows liquid and to
encourage investment into risker markets, including stocks in
Asia.
Douglas Coté, chief market strategist for Voya Investment
Management, said Greece is just a tiny slice of the world economy.
"I'm watching it, but there's no panic," Mr. Coté said. "If there
is a selloff, it's an opportunity for investors to get in."
Analysts at AXA Investment Management said markets could be
volatile in the aftermath of the vote. But they added that even
with a Syriza win, Greece's elections are likely to have either a
"marginal" effect or "no material impact on the rest of the euro
area."
George Rusnak, co-head of fixed income at Wells Fargo Investment
Institute, said it would set a better tone for markets if Syriza
were required to find a coalition partner. If a partner is needed,
"it sets that tone that they have to start negotiating," and could
prompt the party's leaders to move away from their most extreme
positions, Mr. Rusnak said.
Mr. Rusnak said he has been recommending that investors hold an
underweight position in international sovereign bonds from
developed countries, noting that Syriza's electoral victory could
lead to uncertainty in the short-term. Yields on some short-term
European bonds are already negative, meaning bond prices are high,
making it difficult to see a major rally on the horizon.
"The key thing is, will they have the majority or not?" Mr.
Rusnak said.
Juliet Samuel contributed to this article.
Write to Mike Cherney at mike.cherney@wsj.com
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