Asian stock markets ruffled by Greece cash crunch, prospect of Fed rate hike

Asian stock markets were ruffled Wednesday by Greece's impending cash crunch and expectations the Federal Reserve will raise interest rates this year for the first time in almost a decade.

KEEPING SCORE: Japan's Nikkei 225 drifted 0.2 percent higher to 20,472.58 while South Korea's Kospi sank 1.7 percent to 2,107.50. Hong Kong's Hang Seng dropped 0.8 percent to 28,021.57 and Australia's S&P/ASX 200 slipped 0.8 percent to 5,725.30. Stocks in Southeast Asia were lower while the Shanghai Composite rose 0.8 percent to 4,951.54.

STRONG GREENBACK: The U.S. dollar stabilized after getting a big boost by signs of improvement in the U.S. economy such as better-than-expected home sales, durable goods and consumer confidence. Fed Chair Janet Yellen implied that an interest rate hike is likely within this year, further pushing up the greenback. The Federal Reserve Bank of Atlanta said on Tuesday that it raised its second-quarter growth forecast for the U.S. economy to 0.8 percent from 0.7 percent.

ANALYST'S TAKE: After the "Federal Reserve Bank of Atlanta upgraded its gross domestic product forecast for the second quarter, traders quickly upped their bets on the prospects of the Fed tightening this year," said Stephen Innes, senior trader at OANDA Asia Pacific. "Investors are mulling the possibility of a Greek default and the changing political landscape in Spain. Anti-austerity parties are gaining traction across the eurozone's periphery, and that's driving risk-off sentiment in currency markets that are reeling from the Greek drama," Innes said.

GREECE WATCH: Greece might miss a payment on June 5 if it fails to receive bailout funds from creditors, who are demanding that the country make reforms to its economy. Talks to reach a deal resumed Tuesday after a weekend break, but it is unclear whether an agreement can be reached in time. Missing those payments could destabilize the country's financial system and eventually push it out of the 19-country eurozone, a step that could shake the currency union and the global economy.

JOBS DATA: The U.S. Labor Department reports on state unemployment rates for April. In March, employers in U.S. states cut jobs as weak economic growth weighed on hiring and a slowdown in oil and gas drilling caused big job losses in some states.

WALL STREET: U.S. stock markets closed lower on Tuesday. The Dow Jones Industrial average lost 1 percent to 18,041.54. The Standard & Poor's 500 dropped 1 percent to 2,104.20 and the Nasdaq composite fell 1.1 percent to 5,032.75.

ENERGY: Benchmark U.S. crude added 54 cents to $58.57 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.69 to close at $58.03 a barrel in Nymex floor trading on Tuesday. Brent crude, a benchmark for international oils, rose 60 cents to $64.33 a barrel in London.

CURRENCIES: The dollar weakened to 122.93 yen from 122.99 yen in the previous trading session. The euro strengthened to $1.0925 from $1.0881.