By V. Phani Kumar and Michael Kitchen, MarketWatch
HONG KONG (MarketWatch) -- Asian stocks rallied Monday as news
that Cyprus and its international lenders reached a bailout
agreement removed fears of the nation's exit from the euro zone,
also helping boost U.S. equity futures, the euro and crude-oil
prices.
The broad terms of the bailout agreement pave the way for Cyprus
to receive up to 10 billion euros ($13 billion) in bailout funds,
while protecting depositors holding less than EUR100,000 in their
bank accounts from any deposit taxes.
Japan's Nikkei Stock Average jumped 1.9% and South Korea's Kospi
gained 1.3%, while Hong Kong's Hang Seng Index added 0.7% and
Australia's S&P/ASX 200 index climbed 0.5%.
On the downside, the Shanghai Composite Index fell 0.2% in
choppy trading.
"The bailout deal will mean that the risks of Cyprus defaulting
and leaving the euro zone will have significantly diminished," said
Crédit Agricole's Asia head of global markets research Mitul
Kotecha.
However, Kotecha also cautioned about the sustainability of the
rally.
"The deal will still involve a huge amount of work on Cyprus's
part to find the $5.8 billion needed to supplement the EUR10
billion bailout, and subsequently, a lot of economic pain
involved," he said. "The current risk rally is likely to fade
quickly as markets begin to focus on the task at hand."
Also, Moody's Investors' Service said the crisis in Cyprus was
credit negative for all sovereign ratings in the euro area.
"Even if negotiations are successful and Cyprus remains within
the euro area, policy makers' recent decisions raise the risk of
deposit outflows, capital flight, increased bank and
sovereign-funding costs and broader financial market dislocation
... even if those decisions don't disrupt financial market calm in
the present," the credit ratings agency said in a statement.
News of the deal also buoyed U.S. stock-index futures, with
those for the Dow Jones Industrial Average (DJM3) rising 43 points,
or 0.3%, to 14,502. S&P 500 futures (SPM3) rose 0.4%, and
Nasdaq 100 futures (NDM3) climbed 0.5%.
Among other asset classes, the euro (EURUSD) rose back above the
$1.30 level, while benchmark U.S. crude-oil futures advanced about
0.4% in commodities trading.
Several financial stocks across the region joined in the relief
rally.
Nomura Holdings Inc. (NMR) rose 1.7% in Tokyo, and Woori Finance
Holdings Co. (WF) soared 5% in Seoul. In Sydney, Macquarie Group
Ltd. (MCQEF) gained 2.5%, and Westpac Banking Corp. (WBK) added
1.5%.
In Japan, retailers extended the strong gains they had enjoyed
in recent sessions, with Takashimaya Co. (TKSHF) jumping 8%, and
Fast Retailing Co. (FRCOY) adding 4.2%.
The advance came even as a European Union summit with Japan was
delayed due to the Cyprus crisis. Officials from the two economies
are due to discuss a wide-ranging free-trade deal.
In Hong Kong, the market saw support by gains in China
Construction Bank Corp. (CICHY) and refiner China Petroleum &
Chemical Corp., or Sinopec (SNP), following their 2012 earnings
reports.
CCB shares climbed 2.3% after the company narrowly beat
estimates with a 14% increase in 2012 profit, while Sinopec shares
jumped 3.2% in spite of a 13% drop in its annual profit.
In Shanghai, shares of CCB climbed 1.7%, but Sinopec fell
1.6%.
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