HONG KONG: Asian markets retreated Friday ahead of the weekend’s Greek referendum that could decide its eurozone future, while Shanghai plunged more than seven percent, at the end of a torrid week for mainland investors.
Wall Street ended in the red as a strong increase in US jobs was overshadowed by the Greek crisis and stagnant wage growth.
Tokyo eased 0.36 percent as the yen edged back up against the dollar, Hong Kong eased 0.12 percent and Sydney slipped 1.27 percent, while Seoul dropped 0.16 percent.
Shanghai tumbled 7.13 percent, with the mainland market pummelled by profit-taking and margin traders calling in their bets. The Shenzhen Composite Index, which tracks stocks on China’s second exchange, dived 6.96 percent.
With Greeks heading to the polls Sunday, analysts said investors were in a holding pattern until they had a better idea about the country’s future.
Greek Prime Minister Alexis Tsipras broke off debt reform talks Saturday and called the plebiscite on creditors’ proposals — leading it to default on a loan repayment Tuesday.
European leaders have warned that the poll is effectively an in-out vote on Greece’s future in the eurozone.
“There could be some hesitation from investors” ahead of the Greek vote, Chris Weston, chief market strategist at IG in Melbourne, said.
“Markets just want to see it getting solved so the contagion effect can be mitigated and we can move on to other things.”
The EU and IMF added to pressure Thursday, slashing Greece’s growth forecasts for this year and warning it will need tens of billions of euros over the next three years to stabilise its finances.
– Shanghai extends rout –
US data showed the economy created a solid 223,000 jobs in June and the unemployment rate fell to 5.3 percent from 5.5 percent. However, the report also said hourly earnings were flat compared with May, while the estimates for job growth in April and May were cut.
The Dow dipped 0.18 percent, the S&P 500 eased 0.06 percent and the Nasdaq dropped 0.10 percent.
The soft wage data led investors to ease back on their bets for a September Federal Reserve interest rate rise, with speculation now for a December lift-off.
That pushed the dollar lower, buying 122.95 yen in Asia, against 123.07 yen in New York and well off the 123.54 yen earlier Thursday in Tokyo.
The euro fetched $1.1089 and 136.32 yen against $1.1086 and 136.43 yen
Mainland Chinese markets resumed their sharp downward spiral, with Shanghai now down almost 30 percent from its June 12 peak.
It had risen more than 150 percent over the previous year but economists say it has been hit by fears stocks were overvalued, profit-taking and margin traders unwinding their positions.
Interventions by authorities including a surprise interest rate cut at the weekend — the fourth since November — and relaxing rules on margin trading have failed to arrest the declines.
“Chinese brokers may still be looking at reducing their risk exposure by closing more margin debt,” Bernard Aw, Singapore-based strategist at IG Asia, said.
On oil markets US benchmark West Texas Intermediate for August delivery was down 40 cents at $56.53 a barrel and Brent fell 26 cents to $61.81.
Gold fetched $1,166.37 compared with $1,161.50 late Thursday.