February 28, 2017 / 3:30 PM / 6 months ago

UPDATE 1-CEE MARKETS-MOL hits Budapest shares, Hungarian central bank remains dovish

    * MOL disappoints, Budapest stock index sets 8-week low
    * Hungary central bank keeps rates, dovish talk unchanged

 (Adds Hungarian central bank comments)
    By Sandor Peto
    BUDAPEST, Feb 28 (Reuters) - Weaker-than-expected earnings
from oil group MOL knocked Budapest stocks down
to an 8-week low on Tuesday, just a week after they hit record
highs.
    The forint eased a quarter of a percent to 308.35
against the euro at 1445 GMT as the Hungarian central bank kept
its interest rates on hold and maintained its dovish bias as
expected.     
    The bank shrugged off a rise in inflation across Central
Europe. In Hungary, the annual rate jumped to 2.2 percent in
January from 0.5 percent in December, and the bank said it could
reach its 3 percent target by the first half of 2018.
    The bank will discuss the quarterly inflation report in
March and some analysts think that could be a good opportunity
to drop its dovish rhetoric.
    But Erste Bank analyst Gergely Urmossy said it was more
likely that the bank would ease policy through cutting its limit
on its 3-month deposits so as to weaken the forint and keep
interest rates low.
    It has been too early for forward rate agreements to price
in a rise in Hungarian interbank interest rates in the next
quarters, he said in a note.
    "The market's view is too hawkish," he added. 
    Hungarian data released early on Tuesday showed a 20-percent
slump in investments last year.
    Investments are expected to pick up across the region this
year after a temporary slowdown of European Union funding
inflows last year.
    The prospect of accelerating economic growth and bullish
sentiment in global stock markets have contributed to a rally of
regional equities this year which lost steam in the past week.
    Hungarian stocks hit record highs in November, also helped
by strong fundamentals for blue-chip companies.
    But they retreated from a new record high hit last week as
Magyar Telekom's earnings and dividend forecasts disappointed
investors and price target cuts for OTP Bank and drug
maker Richter triggered profit-taking.
    MOL's earnings report broke a rebound that had started on
Monday, with the group's stock down 3.9 percent after news that
core earnings were 139.6 billion forints in the fourth quarter
of 2016, below analysts' 151.3 billion median forecast.
 
    The Budapest bourse's main stock index fell 1.8
percent, while Warsaw shed 0.6 percent and Prague
0.4 percent. 
    A surge in fuel retailer Petrol shares to an
almost 10-year high boosted Ljubljana's stock index by
1.5 percent. 
    
 CEE        SNAPS   AT  1545          
 MARKETS    HOT    CET           
            CURRENCIES                
            Lates  Previ  Daily  Chang
            t      ous           e
            bid    close  chang  in
                          e      2017
            27.02  27.02   +0.0  -0.05
               10     45     1%      %
            308.3  307.6  -0.24  0.15%
              500    100      %  
            4.315  4.312  -0.07  2.06%
                2      2      %  
            4.523  4.515  -0.18  0.25%
                7      5      %  
            7.434  7.427  -0.09  1.63%
                0      5      %  
            123.6  123.9   +0.2  -0.24
              500    300     3%      %
 calculate  previ  close  1800        
 d from     ous    at     CET    
            STOCK                     
            S                    
            Lates  Previ  Daily  Chang
            t      ous           e
                   close  chang  in
                          e      2017
            955.1  958.6  -0.37   +3.6
                1      1      %     3%
            32276  32872  -1.81   +0.8
              .79    .11      %     6%
            2196.  2210.  -0.63   +12.
               26     26      %    75%
            8016.  8009.   +0.0   +13.
               84     95     9%    15%
            791.4  779.8   +1.4   +10.
                4      0     9%    29%
            2220.  2229.  -0.41   +11.
               27     39      %    30%
 <.BELEX15  718.7  716.7   +0.2   +0.2
 >              7      5     8%     0%
            611.1  612.4  -0.22   +4.2
                2      8      %     1%
            BONDS                     
            Yield  Yield  Sprea  Daily
                          d      
            (bid)  chang  vs     chang
                   e      Bund   e in
                                 sprea
                                 d
 <CZ2YT=RR   -0.5  0.023   +041   +1bp
 >                          bps      s
 <CZ5YT=RR  0.092  -0.02   +067  -3bps
 >                     7    bps  
 <CZ10YT=R  0.629  0.054   +042   +5bp
 R>                         bps      s
                                      
 FORWARD    RATE   AGREEMENT          
            3x6    6x9    9x12   3M
                                 inter
                                 bank
         <   0.26   0.28   0.32      0
 PRIBOR=>                        
         <   0.29   0.47   0.58   0.23
 BUBOR=>                         
         <   1.76   1.79   1.87   1.73
 WIBOR=>                         
 are for                              
 ask                             
 prices                          
 

 (Editing by Tom Heneghan)
  
 
 

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