Connect with us

Hi, what are you looking for?

Capital Business
Capital Business
On Friday, 26 of the EU 27 members backed tighter budget policing/FILE

World

Asian markets higher after EU debt deal

On Friday, 26 of the EU 27 members backed tighter budget policing/FILE

HONG KONG, Dec 12 – Asian markets rose on Monday with investors cautiously welcoming last week’s agreement by European leaders to introduce tougher fiscal rules in a bid to save the eurozone.

However, traders remained nervous as Britain chose not to join the deal, while eyes will be on Standard & Poor’s, which last week warned the eurozone of a downgrade if it was unable to come up with a viable plan.

Tokyo rose 1.64 in the afternoon, Hong Kong gained 1.42 percent by lunch, Sydney was 0.95 percent higher and Seoul added 0.94 percent but Shanghai slipped 0.45 percent.

On Friday 26 of the EU 27 members backed tighter budget policing in a “new fiscal compact” to resolve the crisis threatening to crack apart the monetary union and send the global economy into another deep recession.

The 17 eurozone nations signed up to the pact – which gives the EU more power over national budgets – while nine non-members “indicated the possibility to take part in this process” after consulting their parliaments.

However, Germany’s hope for a treaty revision were dashed when Britain’s Prime Minister David Cameron opted out of the plan by using his veto, saying he could not get the protection he wanted for the City of London financial centre.

“This provides a framework for medium term improvement in debt levels,” said Ric Spooner, currency strategist at CMC Markets in Sydney, according to Dow Jones Newswires.

RBS head of domestic sales trading and execution Justin Gallagher said a European collapse was avoided but “that doesn’t necessarily mean Europe won’t continue to be a battle in the short-to-medium term”.

Some leaders hope the pact will convince the European Central Bank to drop its reluctance to use its full arsenal against the crisis after ECB president Mario Draghi called for a “new fiscal compact” last week.

Draghi dubbed the summit decisions a “very good outcome” for the eurozone.

Advertisement. Scroll to continue reading.

Leaders also planned to pump 200 billion euros ($267 billion) into IMF coffers to help the eurozone, which is struggling to boost its own rescue fund to one trillion euros.

The ECB would act as an agent for the bailout fund, the European Financial Stability Facility (EFSF).

The EFSF’s successor, the European Stability Mechanism (ESM), will come into force earlier than first mooted in July 2012, with a lending capacity of 500 billion euros.

Standard & Poor’s is expected to pass judgement on the agreement this week after putting 15 of the euro-member states — including France and Germany — on downgrade warning.

The agency last week announced the bloc’s AAA status was on creditwatch citing worsening economic conditions and discord among leaders.

Robert Rennie, chief currency strategist for Westpac in Sydney, said: “The question we all need answered is will this loose pack stand the test of time or will nations just walk away from this agreement at the first hint of trouble.

“The markets will use S&P’s view as a report card on whether that was achieved.”

In Tokyo the euro bought $1.3345 and 103.62 yen on Monday, down from $1.3384 and 103.93 yen late Friday in New York where the common European currency rose on the EU deal.

The dollar was at 77.65 yen compared with 77.60 yen late on Friday.

Advertisement. Scroll to continue reading.

New York’s main contract, light sweet crude for January delivery, dropped 12 cents to $99.29 a barrel and Brent North Sea crude for January delivery fell 16 cents to $108.46.

Gold was trading at $1,695.20 an ounce at 0415 GMT, from $1,713.99 late Friday.

Click to comment
Advertisement

More on Capital Business

Executive Lifestyle

NAIROBI, Kenya, Mar 12 – The country’s super wealthy individuals are increasing their holding of bonds, gold and cash, a new report by Knight...

Ask Kirubi

NAIROBI, Kenya, Mar 9 – Businessman and industrialist Dr. Chris Kirubi has urged members of the public to exercise extreme caution when making any...

Ask Kirubi

NAIROBI, Kenya, Mar 24 – Businessman and industrialist Dr. Chris Kirubi is set to own half of Centum Investment Company PLC, following a go-ahead...

Ask Kirubi

It is without a doubt that the COVID-19 pandemic has caught the whole world by surprise. Although its full impact is yet to be...

Headlines

NAIROBI, Kenya, Mar 18 – Commercial Banks have been ordered to provide relief to borrowers on their personal loans, with loans eligible from March...

Kenya

NAIROBI, Kenya, Jun17 – Kenya’s tea leaves manufacturer Kericho Gold, has been awarded the Superbrands Seal by Superbrands East Africa for their quality variety...

Coronavirus

NAIROBI, Kenya, Apr 13 – As the local telecommunications industry gears up to roll out 5G networks in the country, the Communications Authority of...

Coronavirus

NAIROBI, Kenya, Mar 22 – Airtel Kenya is offering free internet access for students in order to enable continued learning at home in the...