March 10, 2020 / 11:14 AM / a month ago

CEE MARKETS-CEE stocks recover ground on stimulus hopes; leu hits fresh low

    By Radu-Sorin Marinas
    BUCHAREST, March 10 (Reuters) - Central European stock
indexes recovered some ground on Tuesday after marking their
biggest drop since the 2008 financial crisis in the previous
session as global markets rebounded amid hopes of fresh stimulus
to cushion the impact of the coronavirus.
    In Romania, the leu hit a fresh all-time low as domestic
political uncertainty ahead of a parliamentary vote of
confidence added to the anxiety over new coronavirus cases
across the world.    
    However, most benchmark government bond yields managed to
rise from record lows hit the previous day, as hopes for
stimulus to support global growth in the face of epidemic lifted
risk sentiment.
    As of 0950 GMT, the leu fell as low as 4.8255 to
the euro before recovering slightly to trade virtually unchanged
on the day. The Czech crown weakened 0.2%, while
Hungary's forint and the Polish zloty were
trading flat.   
    "There were no factors to help firm the leu, both externally
and domestically," said one dealer with a foreign bank in
    The Czech Republic will also close schools indefinitely and
ban events hosting more than 100 people, Prime Minister Andrej
Babis said on Tuesday.        
    Political factors weighed in as Romania is being governed by
an interim government with limited powers since Feb. 5, after
lawmakers toppled the three-month-old centrist minority
government of Prime Minister Ludovic Orban.
    Seeking to form a transitional government until a general
election in November, Prime Minister-designate Florin Citu faces
a vote of confidence in the highly fragmented parliament on
Thursday, and pundits are evenly split regarding the outcome.
    A rejection of Citu's cabinet will prolong the political
deadlock for several weeks, with President Klaus Iohannis
required to make a new nomination.  
    Authorities took unprecedented measures on Monday to try to
ward off the virus, shutting down all schools and banning all
flights to and from Italy, after the number of new infections
rose to 17.
    Central European stock indexes recovered partially on
Tuesday, after falling in the previous session as investors
fretted over the impact of the fast-spreading virus and as the
number of new infections and fatalities jumped in Italy over the
    Budapest and Warsaw climbed between 1-3%
after tumbling more than 7% in their worst one-day drop since
December 2008.
    Investors have maintained a cautious stance and are awaiting
to see measures adopted by central banks and governments to ease
the economic blow from the coronavirus outbreak. 
    Regional central bank officials expressed a cautious
approach last week, suggesting that they need more time to
assess the economic effects of the virus.
    In Hungary, headline inflation came in at 4.4%
year-on-year in February, above market forecasts and the central
bank's own projection, while core inflation scaled levels not
seen since the end of 2012, data showed on Tuesday.
    Hungary's national bank is the most dovish in the region
with its base rate at 0.9%. The higher-than-expected inflation
data in January has already put pressure on it, with deputy
governor Marton Nagy saying the bank would use all available
tools if needed to fight high inflation.
           CEE        SNAPSHOT     AT                     
           MARKETS                1227             
                      Latest      Previou  Daily   Change
                      bid         close    change  in 2020
 Czech                   25.5800  25.5090  -0.28%   -0.58%
 Hungary                335.7000  336.190   +0.15   -1.36%
 forint                                 0       %  
 Polish                   4.3210   4.3175  -0.08%   -1.50%
 Romanian                 4.8180   4.8230   +0.10   -0.62%
 leu                                            %  
 Note:     calculated from                 1800           
 daily                                     CET     
                      Latest      Previou  Daily   Change
                                  close    change  in 2020
 Prague                   942.02  913.470   +3.13  -15.56%
                                        0       %  
 Budapest               39127.52  38075.8   +2.76  -15.09%
                                        3       %  
 Warsaw                  1644.87  1625.99   +1.16  -23.50%
 Buchares                8956.81  8733.96   +2.55  -10.23%
 t                                              %  
 Ljubljan                 840.83   818.10   +2.78   -9.18%
 a                                              %  
 Zagreb                  1689.92  1650.55   +2.39  -16.23%
 Belgrade  <.BELEX15      762.18   764.78  -0.34%   -4.93%
 Sofia                    490.28   475.63   +3.08  -13.70%
                      Yield       Yield    Spread  Daily
                      (bid)       change   vs      change
                                           Bund    in
 Czech                                             spread
   2-year  <CZ2YT=RR      1.6600  -0.0930   +257b   -19bps
           >                                   ps  
   5-year  <CZ5YT=RR      1.2290  -0.0160   +213b   -11bps
           >                                   ps  
           <CZ10YT=R      1.1070  -0.0130   +184b   -12bps
 10-year   R>                                  ps  
   2-year  <PL2YT=RR      1.3000   0.1070   +221b    +2bps
           >                                   ps  
   5-year  <PL5YT=RR      1.3780   0.1220   +228b    +3bps
           >                                   ps  
           <PL10YT=R      1.5650   0.1320   +230b    +2bps
 10-year   R>                                  ps  
                      3x6         6x9      9x12    3M
 Czech             <  Real-Time   Real-Ti  Real-T  Real-Ti
 Rep       PRIBOR=>   Engine      me       ime     me
                      Initializa  Engine   Engine  Engine
                      tion Error  Initial  Initia  Initial
                                  ization  lizati  ization
                                  Error    on      Error
 Hungary           <  Real-Time   Real-Ti  Real-T  Real-Ti
           BUBOR=>    Engine      me       ime     me
                      Initializa  Engine   Engine  Engine
                      tion Error  Initial  Initia  Initial
                                  ization  lizati  ization
                                  Error    on      Error
 Poland            <  Real-Time   Real-Ti  Real-T  Real-Ti
           WIBOR=>    Engine      me       ime     me
                      Initializa  Engine   Engine  Engine
                      tion Error  Initial  Initia  Initial
                                  ization  lizati  ization
                                  Error    on      Error
 Note:     are for ask prices                             

 (Additional reporting by Anita Komuves in Budapest and Jason
Hovet in Prague; Editing by Sherry Jacob-Phillips)
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