Stocks retreat after short-lived rebound, Hungarian bond yields fall

27 Dec, 2018

Technical factors and uncertainty about tax hikes in Romania also kept Budapest and Bucharest stocks under pressure.

Hungary's long-term government bond yields set multi-month lows, however, tracking US and German peers and after the Government Debt Management Agency (AKK) published its offer for next year's first Treasury bill and bond auctions.

A rise in the amount of the weekly offer reflects optimism that yields will stay low, a Budapest-based fixed income trader said.

The 10-year Hungarian bond yield was fixed at 3.02 percent, its lowest since early June and down 8 basis points from the previous session on Friday.

The AKK is due to publish its financing plan for 2019 on Friday.

Equities markets remained jittery despite Wall Street having soared on Wednesday.

A 1.1-percent fall in Budapest's index pushed it into a year-to-date loss as OTP and other blue-chips weakened through technical support levels.

Prague's main index turned an initial 1 percent rise from a 1-1/2-year low into a 0.2 percent loss by 1415 GMT.

Romania's blue-chip index was flat, but gave up an initial rise of almost 3 percent. That market has been nervous since the government announced plans for higher business taxes last week to tackle a rising budget deficit.

The index jumped 7 percent on Monday after the government approved a somewhat watered-down version of the package, but failed to extend its recovery on Thursday when the market reopened after the Christmas break.

"The) new fiscal measures could be insufficient for keeping the budget afloat, because they increase the risk of a severe economic slowdown, hurting ...budget revenues," Erste Group analyst Eugen Sinca said in a note dated Dec. 24.

The leu shed 0.2 percent and the forint 0.1 percent against the euro. The zloty eased 0.15 percent, reversing early gains.

The Czech crown bucked the trend, firming 0.4 percent to 25.835 against the euro.

Further swings are possible, as the size of Czech banks' year-end contributions to a national bailout insurance fund is determined by their crown deposits as of midnight on Thursday, dealers said.

Copyright Reuters, 2018
 

 

 

 

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