Both Asian share markets and the euro fell in Asian trading on Tuesday after Greek leaders refused a plan to request a six-month extension of its 240 billion euro bailout program. Without the necessary support from creditors, Greece may face a significant cash flow problem which would cause them to leave the common currency. The decision to abandon the six-month bailout extension came as a surprise to many analysts who had expected a deal to be reached. Greece has until Friday to request the bailout extension or the bailout will be terminated at the end of February. The euro remained safely away from last week’s low, but did dip to $1.1332 during the Asian session. The session ended at $1.1350, down 0.5 percent for the day.
The price of gold rose on Tuesday for the fourth straight day to $1,233.60 per ounce as investors flocked to the safe-haven asset in response to their concerns about Greece. Oil prices remained high as well in response to concerns about the security situation in Libya. After hitting an eight-week high of $62.57 per barrel on Monday Brent crude futures fell slightly to $61.74 per barrel during Tuesday’s Asian session. American markets have been closed since Friday due to President’s weekend and will reopen for Tuesday’s session.
Looking Ahead
Though Greece currently seems to be without a long-term plan to ameliorate the country’s financial difficulties, many analysts are quick to point out that Friday is a long way off and that deals of this magnitude are often formed in the eleventh hour. A recent poll in Greece showed that 81 percent of the nation’s population wants to stay in the euro while only about 30 percent of the nation supported the leadership in their firm stance against the bailout, even if it means withdrawing from the common currency. This overwhelming sentiment, coupled with the fact that Greece is losing approximately 2 billion euros weekly gives analysts optimism that a deal will be reached by the deadline set for Friday.