HONG KONG: Asian markets mostly retreated on Friday ahead of the weekend’s Greek referendum that could decide its eurozone future, while Shanghai plunged almost six percent, at the end of another 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.
Seoul dropped 0.14 percent, or 2.92 points, to end at 2,104.41 and Sydney fell 61.5 points, or 1.1 percent, to 5,538.3. Hong Kong fell 0.83 percent, or 218.21 points, to 26,064.11.
Shanghai tumbled 7.13 percent at one point in the morning and Shenzhen slumped 6.96 percent, with mainland markets pummelled by profit-taking and margin traders calling in their bets.
Despite a mild recovery in early afternoon exchanges the two indexes closed sharply lower again. Shanghai slid 5.77 percent, or 225.85 points, to 3,686.92, giving up 12.07 percent since last Friday.
Shenzhen sank 5.30 percent, or 117.33 points, to 2,098.48—losing 16.16 percent over the week.
However, Tokyo reversed morning losses to end marginally higher, adding 17.29 points to 20,539.79.
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 stabilize its finances.
China market ‘panic’
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 123.05 yen in Asia, against 123.07 yen in New York and well off the 123.54 yen earlier Thursday in Tokyo.
The euro fetched $1.1102 and 136.70 yen against $1.1086 and 136.43 yen.
Mainland Chinese markets resumed their sharp downward spiral, with Shanghai now down almost a third 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.
“For now, the mood is verging on panic, and it is extremely hard to calm a bear who is in a rage,” Bernard Aw, a strategist at IG Asia in Singapore, said.
And Cinda Securities chief strategist Chen Jiahe told Agence France-Presse: “China has too many retail investors and their state of mind is very unstable and they lack professional investment knowledge.”
The country’s market regulator pledged Thursday to crack down on market manipulation after rumors that foreign short-sellers were behind recent losses.
The comments came after accusations on Chinese social media that overseas investors were driving prices down by short-selling mainland stocks.
On oil markets, US benchmark West Texas Intermediate for August delivery was down 29 cents at $56.64 while Brent North Sea crude was 24 cents lower at $61.83.
Gold fetched $1,167.50 compared with $1,161.50 late Thursday.