CEE MARKETS-Stock markets give up early gains as virus fears eclipse U.S. stimulus

Credit: REUTERS/BERNADETT SZABO

Early gains in Central European stock markets mostly melted away on Wednesday, as investors' optimism over a $2 trillion economic stimulus bill in the United States faded and fears over the coronavirus pandemic took hold of markets again.

By Anita Komuves and Jason Hovet

BUDAPEST/PRAGUE, March 25 (Reuters) - Early gains in Central European stock markets mostly melted away on Wednesday, as investors' optimism over a $2 trillion economic stimulus bill in the United States faded and fears over the coronavirus pandemic took hold of markets again.

The U.S. stimulus package lifted market sentiment around the world earlier on Wednesday. It includes a large increase in unemployment insurance and hundreds of billions of dollars to aid companies harmed by the outbreak.

Prague's equities .PX were still up 2% on the day by 1315 GMT, after a more than 7% jump in the morning. Bucharest's index .BETI was up 2.2%, while stocks in Budapest .BUX were up less than 1% after an initial rise of more than 3%. Warsaw's stocks .WIG20 were down 0.88%.

The Czech Finance Ministry sold a total of 53.4 billion crowns ($2.11 billion) of three types of bonds, several times more than planned, at a Wednesday auction as it ramps up borrowing.

The government plans a five-fold increase in the 2020 state budget deficit to fight the economic impact of the coronavirus and is boosting bond issuance to finance it.

One dealer said the demand was the largest ever and the amount sold showed the ministry needed the money. "They utilised demand in quite a fashion," the dealer said.

Hungary's central bank announced its first new collateralised loan tenders on Wednesday, offering liquidity to banks at a fixed rate of 0.9% on various maturities.

The bank offered one-week, 3-month, 6-month, 12-month loans, as well as loans for 3 years and 5 years to commercial banks. The results will be announced later on Wednesday.

This was the first tender of the NBH's new liquidity-boosting instrument, which was announced on Tuesday.

The bank left interest rates unchanged on Tuesday, as expected, and introduced the new fixed-rate collateralised loan instrument with unlimited liquidity.

"This tool will be able to stabilize not only lending, but also the government securities market ... and this is what we have seen today," Deputy Governor Marton Nagy said, referring to a drop in yields, especially at the long end of the yield curve on Tuesday.

Five- and 10-year government bond yields dropped in Hungary by more than 50 basis points on Tuesday before the NBH's announcements, anticipating the measures, analysts say.

Yields on 10-year Hungarian bonds were up by 20 basis points on Wednesday, a fixed income trader in Budapest said.

The Hungarian forint EURHUF= eased 0.14% on Wednesday and was trading at 355.00, continuing its slip from the day before in reaction to the NBH's measures.

Central European governments have announced a series of emergency measures recently to counter the economic blow from lockdowns, production halts and disruption to business activity and supply chains.

The Czech, Polish and Romanian central banks have cut their benchmark rates and announced steps to shore up economic activity.

Elsewhere, the Czech crown EURCZK= was up, gaining 0.84% and trading at 27.463 to the euro. The zloty EURPLN= gained 0.53% and was trading at 4.582. The Romanian leu EURRON= firmed 0.2% and was trading at 4.834 to the euro.

CEE MARKETS

SNAPSHOT

AT 1415 CET

CURRENCIES

Latest

Previous

Daily

Change

bid

close

change

in 2020

EURCZK=

Czech crown

EURCZK=

27.4630

27.6950

+0.84%

-7.40%

EURHUF=

Hungary forint

EURHUF=

355.0000

354.5000

-0.14%

-6.72%

EURPLN=

Polish zloty

EURPLN=

4.5823

4.6065

+0.53%

-7.11%

EURRON=

Romanian leu

EURRON=

4.8345

4.8445

+0.21%

-0.96%

EURHRK=

Croatian kuna

EURHRK=

7.6060

7.6115

+0.07%

-2.11%

EURRSD=

Serbian dinar

EURRSD=

117.3800

117.5450

+0.14%

+0.16%

Note: daily change

calculated from

1800 CET

Latest

Previous

Daily

Change

close

change

in 2020

.PX

Prague

.PX

810.42

794.7400

+1.97%

-27.36%

.BUX

Budapest

.BUX

32820.20

32614.56

+0.63%

-28.78%

.WIG20

Warsaw

.WIG20

1438.19

1451.02

-0.88%

-33.11%

.BETI

Bucharest

.BETI

7639.44

7472.17

+2.24%

-23.43%

.SBITOP

Ljubljana

.SBITOP

734.44

706.27

+3.99%

-20.67%

.CRBEX

Zagreb

.CRBEX

1405.76

1403.99

+0.13%

-30.32%

.BELEX15

Belgrade

.BELEX15

629.80

616.31

+2.19%

-21.44%

.SOFIX

Sofia

.SOFIX

424.82

418.88

+1.42%

-25.23%

Yield

Yield

Spread

Daily

(bid)

change

vs Bund

change in

Czech Republic

spread

CZ2YT=RR

2-year

CZ2YT=RR

1.2750

0.0410

+188bps

+1bps

CZ5YT=RR

5-year

CZ5YT=RR

1.5240

0.0810

+201bps

+6bps

CZ10YT=RR

10-year

CZ10YT=RR

1.5320

-0.0220

+182bps

-5bps

Poland

PL2YT=RR

2-year

PL2YT=RR

0.9560

0.0230

+156bps

-1bps

PL5YT=RR

5-year

PL5YT=RR

1.3640

0.0240

+185bps

+0bps

PL10YT=RR

10-year

PL10YT=RR

1.8810

0.0840

+217bps

+5bps

FORWARD

3x6

6x9

9x12

3M interbank

Czech Rep

CZKFRAPRIBOR=

0.69

0.40

0.47

1.74

Hungary

HUFFRABUBOR=

0.47

0.38

0.39

0.50

Poland

PLNFRAWIBOR=

0.63

0.47

0.46

1.17

Note: FRA quotes

are for ask prices

(Additional reporting by Jason Hovet in Prague and Alan Charlish in Warsaw; editing by Larry King and Alex Richardson)

((komuves.anita@thomsonreuters.com(+36 70 795 8815))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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