Asia stocks rise on Greek election results; Nikkei up 1.74%

Investing.com - Asian stocks shot up on Monday in wake of the market-friendly New Democracy political party's victory in Greek parliamentary election on Sunday.

The results indicated Greeks favor sticking with the euro, which sparked a relief rally in Asian equities markets.

During Asian trading on Monday, Hong Kong's Hang Seng Index was up 1.58%, Australia's S&P/ASX200 was up 1.61%, while Japan’s Nikkei 225 Index was up 1.74%.

Greek elections served as the market's chief weather vane on Monday.

New Democracy edged out the leftist Syriza, which favored scrapping austerity measures tied to bailout money.

While Syriza raked in a good amount of votes, New Democracy and PASOK, another pro-bailout party, appeared on track to garner enough votes at the time of writing to push through a coalition government in favor of sticking with the bailout.

Past Greek administrations agreed to austerity measures such as layoffs and spending cuts in exchange for bailout aid, and scrapping austerity threatened to halt the flow of rescue funding and could have opened the door to a Greek exit of the currency union.

New Democracy and PASOK politicians favor sticking with the bailout, though they have said the country needs more growth-oriented policies going forward.

Leaders across Europe have complained that austerity policies have cut into growth rates and have exacerbated economic downturns.

The New Democracy victory sparked relief buying across markets worldwide, which sent stocks rising as investors ditched safe-haven dollar and yen positions to take on risk.

Meanwhile in the U.S., the Federal Reserve will hold its monetary policy meeting June 19-20.

Talk the Federal Reserve will stimulate a sagging economy is growing, either through outright bond purchases from banks, known as quantitative easing, or by extending a $400 billion program that shuffles its Treasury holdings, known as Operation Twist.

Under Operation Twist, the Fed sells short-dated Treasury instruments and buys longer-dated Treasurys in tandem with the aim of pushing down long-term interest rates.

Unlike quantitative easing, Operation Twist does not expand the Fed's balance sheet, though monetary stimulus measures tend to send stock prices rising.

In Hong Kong, top gainers included CITIC Pacific, up 3.77%, China Overseas, up 3.56%, and CNOOC, up 2.57%.

In Australia, top gainers included Energy Resources of Australia, up 11.11%, Lynas Corp., up 10.23%, and Fairfax Media, up 7.44%.

European stock futures indicated a higher opening.

France's CAC 40 futures pointed to a gain of 1.24%, while Germany's DAX 30 futures signaled a gain of 1.08%. Meanwhile, in the U.K., the FTSE 100 futures indicated a gain of 1.52%.

Dow Jones Industrial Average futures were up 0.41% while the S&P 500 futures were up 0.39%.
Markets will continue to digest the outcome of the Greek elections on Monday.

On Tuesday, the Federal Reserve begins its monetary policy meeting.