Japan stocks fall, yen rises after Greece votes no to austerity

Posted on July 06, 2015 03:56:17 PM | BREAKING NEWS

JAPANESE stocks fell as the yen strengthened after Greek voters rejected austerity demanded by creditors, endangering the nation’s future in the euro zone.

Tosoh Corp. plunged 6.9%, leading declines on the Nikkei 225 Stock Average. Toshiba Corp. tumbled 3.7% after a report the company plans to cut past earnings by as much as 150 billion yen ($1.2 billion) following accounting problems. Shiseido Co. was one of only seven companies to rise on the Nikkei 225.

The Topix lost 1.2% to 1,632.02 as of 9:19 a.m. in Tokyo, with all of its 33 industry groups declining. The Nikkei 225 dropped 1.3% to 20,270.89. The yen, regarded as a haven, gained 1.1% to 135.02 per euro and added 0.2% against the dollar.

“There is now going to be a period of market uncertainty as we transition through the what-next phase,” Chris Green, Auckland-based director of economics and strategy at First NZ Capital Ltd, said by phone. “There’s a flight to safety. There’ll be a couple of days of head scratching and trying to assess what the next political moves will be.”

With all ballots counted, Greeks have voted 61.3% to back Prime Minister Alexis Tsipras in rejecting austerity measures required to win another bailout package, according to figures posted on the Interior Ministry’s website. The results mean Greece exiting the currency union is now the base-case scenario, JPMorgan Chase & Co. said. Polls last week had indicated the vote would be too close to call.

U.S. Futures

E-mini futures on the Standard & Poor’s 500 Index dropped 1.2% from Thursday. U.S. markets reopen Monday after a holiday on Friday.

The weekend Greek verdict turns the tables on German Chancellor Angela Merkel and her counterparts across Europe, who must decide if a financial rescue of the region’s most indebted country is still possible. It significantly raises the chances of a Greek exit from the single currency, as the country’s banks run out of cash and its economy staggers toward all-out collapse.

Merkel and French President Francois Hollande called for a summit of euro-area leaders to be held July 8. European Union President Donald Tusk confirmed a meeting will be held Tuesday in a Twitter post.

“The Greece ‘no’ vote is a surprise,” Shoji Hirakawa, chief equity strategist at Okasan Securities Co. in Tokyo said by phone. “But the key is that the direction is going toward more talks after this.”

Precedent Risk

While Greece accounts for less than 2% of the euro zone’s output, an exit would set a precedent for other nations that membership is reversible. The country’s immediate fate lies with the European Central Bank, which may take its cues from European Union leaders as to whether it can keep emergency loans flowing to Greece without the prospect of a bailout package.

The Greek government’s decision to call a snap plebiscite on creditors’ demands spurred a deepening in the nation’s financial crisis, with capital controls imposed and the country unable to make a scheduled payment to the International Monetary Fund last week. Finance Minister Yanis Varoufakis had said he would quit if the country voted to endorse the austerity plan.

In China, the government suspended initial public offerings and brokerages pledged to buy shares in weekend measures aimed at halting the steepest plunge in local equities since 1992. - Bloomberg