CEE MARKETS-Stocks, currencies rise on EU stimulus; focus on Hungarian cbank

Credit: REUTERS/DAVID W CERNY

Central European currencies and stocks firmed on Tuesday, as European Union leaders struck a deal on the 750 billion euro coronavirus recovery fund at a summit that lasted almost five days. [nL5N2ES0EV]

By Anita Komuves

BUDAPEST, July 21 (Reuters) - Central European currencies and stocks firmed on Tuesday, as European Union leaders struck a deal on the 750 billion euro coronavirus recovery fund at a summit that lasted almost five days.

Eurozone shares hit their highest since early March after EU leaders agreed on the stimulus package. Encouraging results from several COVID-19 vaccine trials also supported the broader market sentiment.

CEE stocks tracked eurozone assets, with Warsaw's blue chip index .WIG20 leading gains, up 0.9% by 0811 GMT. Prague's assets .PX strengthened 0.7% while Budapest .BUX was up 0.3%. Bucharest's stocks .BETI firmed 0.5%.

The Czech crown EURCZK= was up 0.18% on the day, touching a one-month high, trading at 26.573 versus the euro. The Polish zloty EURPLN= edged up 0.08% to 4.452 to the common currency.

The Hungarian forint EURHUF= strengthened 0.17% to 351.900 to the euro as markets were eyeing the rate-setting meeting of the central bank later on Tuesday.

The bank is expected to cut its base rate by 15 basis points to 0.6% at the meeting, according to a Reuters poll of analysts.

Markets will be watching whether the statement of the bank, to be published at 1300 GMT, will signal the possibility of further monetary easing in the long term, Equilor said in a client note.

"If there is only a rate cut, and no signs of further easing, then we expect only a small move in the forint's exchange rate," they added.

Market focus would be on forward guidance and odds for further cuts so any firm dovish hint in the MPC statement may surprise markets, Citibank said in a note.

"We believe the NBH's optimistic growth forecast projecting a strong rebound in H2 2020 poses downside risks to the interest rate outlook."

Hungarian annual headline inflation was 2.9% in June while core inflation came in at 4%. The NBH targets 3% headline inflation with a tolerance band of a percentage point on either side.

CEE MARKETS

SNAPSHOT

AT 1011 CET

CURRENCIES

Latest

Previous

Daily

Change

bid

close

change

in 2020

EURCZK=

Czech crown

EURCZK=

26.5730

26.6200

+0.18%

-4.29%

EURHUF=

Hungary forint

EURHUF=

351.9000

352.5000

+0.17%

-5.90%

EURPLN=

Polish zloty

EURPLN=

4.4520

4.4555

+0.08%

-4.39%

EURRON=

Romanian leu

EURRON=

4.8410

4.8415

+0.01%

-1.09%

EURHRK=

Croatian kuna

EURHRK=

7.5300

7.5335

+0.05%

-1.12%

EURRSD=

Serbian dinar

EURRSD=

117.5000

117.6200

+0.10%

+0.06%

Note: daily change

calculated from

1800 CET

Latest

Previous

Daily

Change

close

change

in 2020

.PX

Prague

.PX

959.14

952.8500

+0.66%

-14.03%

.BUX

Budapest

.BUX

35298.86

35181.69

+0.33%

-23.40%

.WIG20

Warsaw

.WIG20

1856.66

1840.60

+0.87%

-13.65%

.BETI

Bucharest

.BETI

8534.25

8489.21

+0.53%

-14.46%

.SBITOP

Ljubljana

.SBITOP

857.54

868.57

-1.27%

-7.38%

.CRBEX

Zagreb

.CRBEX

1602.67

1592.21

+0.66%

-20.56%

.BELEX15

Belgrade

.BELEX15

658.88

658.88

+0.00%

-17.81%

.SOFIX

Sofia

.SOFIX

441.74

442.02

-0.06%

-22.25%

Yield

Yield

Spread

Daily

(bid)

change

vs Bund

change in

Czech Republic

spread

CZ2YT=RR

2-year

CZ2YT=RR

0.1340

0.0890

+080bps

+9bps

CZ5YT=RR

5-year

CZ5YT=RR

0.4210

-0.0580

+109bps

-5bps

CZ10YT=RR

10-year

CZ10YT=RR

0.9080

0.0580

+137bps

+5bps

Poland

PL2YT=RR

2-year

PL2YT=RR

0.1310

0.0050

+080bps

+1bps

PL5YT=RR

5-year

PL5YT=RR

0.7890

0.0050

+146bps

+1bps

PL10YT=RR

10-year

PL10YT=RR

1.3470

0.0070

+181bps

+0bps

FORWARD

3x6

6x9

9x12

3M interbank

Czech Rep

CZKFRAPRIBOR=

0.31

0.31

0.33

0.34

Hungary

HUFFRABUBOR=

0.62

0.60

0.58

0.70

Poland

PLNFRAWIBOR=

0.20

0.21

0.24

0.25

Note: FRA quotes

are for ask prices

(Additional reporting by Robert Muller in Prague; Editing by Rashmi Aich)

((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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