May 14, 2020 / 9:44 AM / 20 days ago

CEE MARKETS-Stocks fall for a second day, FX drop on economic worries

    PRAGUE, May 14 (Reuters) - Central European stock markets
fell for a second day on Thursday and currencies retreated
slightly as investors backtracked due to worries the global
economic hit from the coronavirus outbreak would last longer
than expected.
    Bourses in Prague, Budapest and Warsaw
fell around 1% while the Polish zloty tested a
one-month low. Bond markets stayed stronger, though, with Czech
yields falling further to multi-year lows.
    The U.S. Federal Reserve on Wednesday played down chances of
a swift recovery from the economic effects of the coronavirus
and quelled any speculation it would adopt negative interest
rates to combat the downturn, pushing global markets generally
lower.
    Central European markets were bracing for Friday releases of
preliminary gross domestic product data from the first quarter
for the region. 
    However, that will only be a small snapshot of the hit the
pandemic has taken on the region's export-driven economies after
lockdowns started in mid-March and which will push economies
into deep contractions this year.
    Analysts at Czech bank CSOB forecast the economy could show
a 3-4% quarter-on-quarter drop but that for investors the March
and April falls are a "done deal".
    "They are far more sensitive to news on the speed or
slowness of preventive measures and news on the current
reopening," the bank said.
    By 0930 GMT, the Czech crown dropped 0.35% to
27.570 to the euro and the Hungarian forint nudged
down less than 0.1% to 354.50. The zloty was off 0.1% at 4.573.
    Equilor bank said the 355 level would provide resistance to
further weakening. 
    The Hungarian central bank also holds a one-week deposit
tender on Thursday. The new tool has helped the forint rebound
from record lows since the start of April.
    On bond markets, Czech yields edged lower although the
market calmed somewhat after an auction on Wednesday that saw
the Finance Ministry limit the amount sold compared to previous
auctions it has held amid a record borrowing spree to finance a
record deficit target this year.
    The lower supply pushed demand in secondary markets, sending
2-year bond yields to their lowest since September
2017, at below 0.20%.
    "It is quieter today...but still bonds are very firmly bid,"
a dealer said.
    In Poland, the central bank bought around 9.4 billion zlotys
 ($2.22 billion) of bonds on Wednesday as part of its
quantitative easing programme. The bonds were mainly issued by
state fund PFR and state bank BGK to raise money for the
government's economic rescue plan.

                                CEE MARKETS        SNAPSHOT  AT                        
                                                               1130 CET                
                                                                                       
                                CURRENCIES                                             
                                                   Latest    Previous        Daily     Change
                                                   bid       close           change    in 2020
 EURCZK=    Czech crown                            27.5700   27.4740         -0.35%    -7.75%
 EURHUF=    Hungary forint                         354.5000  354.3750        -0.04%    -6.59%
 EURPLN=    Polish zloty                           4.5730    4.5669          -0.13%    -6.92%
 EURRON=    Romanian leu                           4.8370    4.8348          -0.05%    -1.01%
 EURHRK=    Croatian kuna                          7.5705    7.5700          -0.01%    -1.65%
 EURRSD=    Serbian dinar                          117.5400  117.5700        +0.03%    +0.03%
            Note: daily change  calculated from                              1800 CET  
                                                                                       
                                STOCKS                                                 
                                                   Latest    Previous        Daily     Change
                                                             close           change    in 2020
 .PX        Prague                                 869.96    881.6700        -1.33%    -22.02%
 .BUX       Budapest                               34272.09  34518.75        -0.71%    -25.63%
 .WIG20     Warsaw                                 1592.94   1614.32         -1.32%    -25.91%
 .BETI      Bucharest                              8175.58   8229.08         -0.65%    -18.06%
 .SBITOP    Ljubljana                              806.51    808.55          -0.25%    -12.89%
 .CRBEX     Zagreb                                 1539.34   1540.40         -0.07%    -23.70%
 .BELEX15   Belgrade                               663.55    678.61          -2.22%    -17.23%
 .SOFIX     Sofia                                  449.82    452.98          -0.70%    -20.83%
                                                                                       
                                BONDS                                                  
                                                   Yield     Yield           Spread    Daily
                                                   (bid)     change          vs Bund   change in
            Czech Republic                                                             spread
 CZ2YT=RR   2-year                                 0.1200    -0.0640         +086bps   -6bps
 CZ5YT=RR   5-year                                 0.3380    -0.0540         +108bps   -5bps
 CZ10YT=RR  10-year                                0.8450    0.1010          +138bps   +11bps
            Poland                                                                     
 PL2YT=RR   2-year                                 0.5070    -0.0070         +125bps   -1bps
 PL5YT=RR   5-year                                 0.9050    -0.0440         +165bps   -4bps
 PL10YT=RR  10-year                                1.2680    -0.0650         +181bps   -5bps
                                                                                       
                                FRA                                                    
                                                   3x6       6x9             9x12      3M interbank
            Czech Rep                              0.20      0.20            0.20      0.35
            Hungary                                0.92      0.88            0.83      1.05
            Poland                                 0.33      0.29            0.30      0.68
            Note: FRA quotes are for ask prices                                        
            **************************************************************
                                                                                       
 
 (Reporting by Jason Hovet in Prague, Anita Komuves in Budapest
and Alan Charlish in Warsaw; Editing by Angus MacSwan)
  
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