January 11, 2019 / 11:16 AM / 2 months ago

CEE MARKETS-Fed comments help Polish stocks to four-month high

    * Warsaw stocks hit 4-month high as Fed comments boosts mood
    * Oil group PKN Orlen leads gain, reaching one-month high
    * Bourse shrugs off EU scrutiny of state help to energy
firms
    * Government bond yields track continuing drop in core
markets

    By Sandor Peto and Alicja Ptak
    BUDAPEST/WARSAW, Jan 11 (Reuters) - Warsaw's blue chip stock
index jumped to a 4-month high on Friday as Federal Reserve
Chair Jerome Powell's comments on patience in interest rate
tightening helped some Polish shares break through technical
resistance levels.
    The index rose by 0.8 percent by 1005 GMT, gaining
twice as much as MSCI's developing world stocks index.
    Elsewhere in the European Union's eastern wing, Budapest
 and Prague shed 0.3 percent, with Hungarian stocks
retreating from Wednesday's one-year high. 
    Bucharest shares were flat.
    Powell's comments helped fuel a buying of stocks and bonds
this week in global markets, boosting risk appetite.
    "Technical factors are important too (in Warsaw), (as) some
companies have broken their technical levels," said Jaroslaw
Janusz, stock broker at Noble Securities in Warsaw.
    "Energy companies are performing good today, as in the
reality of today in Poland, those companies have the most room
for the growth of revenue. The demand for oil in Poland is
outgrowing refineries' capacities," he added.
    Oil group PKN Orlen's led the gains, rising by 2.5
percent to a one-month high.
    The index of Warsaw-listed banks gained 0.6 percent.
It rose above its 90-day and 200-day moving averages this week.
    Polish shares gained this week even as the European
Commission scrutinizes measures including Dec. 28 legislation to
cut tax on electricity, to see if it complies with EU laws
prohibiting illegal state aid to companies.
    The ruling PiS, which faces national elections later this
year, has offered 4 billion zlotys ($1.07 billion) in
compensation for utilities to prevent a sharp increase in power
prices urged by the firms.
    The shares of state-owned utilities have risen since late
December. Energa has gained 8 percent and Tauron
 has risen by almost 4 percent.
    The dovish Fed comments also helped the region's government
bonds which tracked a continuing decline in U.S. yields.
    The yield on the 10-year Polish benchmark paper
 dropped by 4 basis points to 2.7985 percent.
    The corresponding Czech yield rose a tad to 1.82 percent. It
has risen slowly this year in tandem with Czech FRAs, which
still regained only part of the ground shed in December.
    They fell previously partly because some investors bet that
the Czech central bank would move to a more neutral stance after
an increase in its interest rates last year.
    Regional currencies were lukewarm, and mixed. The crown
 firmed and the zloty eased slightly.
    The forint was flat. Hungary's finance ministry
said the state budget posted a huge surplus in December, but
caused no surprise after recent reports about a late-year surge
of EU fund inflows.
    
            CEE       SNAPSHOT   AT                         
            MARKETS             1105 CET            
                      CURRENCI                              
                      ES                            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2019
 Czech      <EURCZK=   25.5840   25.5940    +0.04%    +0.48%
 crown      >                                       
 Hungary    <EURHUF=  321.3400  321.2500    -0.03%    -0.08%
 forint     >                                       
 Polish     <EURPLN=    4.2970    4.2920    -0.12%    -0.17%
 zloty      >                                       
 Romanian   <EURRON=    4.6780    4.6800    +0.04%    -0.51%
 leu        >                                       
 Croatian   <EURHRK=    7.4260    7.4265    +0.01%    -0.22%
 kuna       >                                       
 Serbian    <EURRSD=  118.3000  118.4500    +0.13%    +0.00%
 dinar      >                                       
 Note:      calculated from               1800 CET          
 daily                                              
 change                                             
                                                            
                      Latest    Previous  Daily     Change
                                close     change    in 2019
 Prague                1012.30  1015.700    -0.33%    +2.61%
                                       0            
 Budapest             40673.22  40795.50    -0.30%    +3.92%
 Warsaw                2354.76   2335.31    +0.83%    +3.43%
 Bucharest             7394.77   7390.87    +0.05%    +0.15%
 Ljubljana  <.SBITOP    805.74    805.90    -0.02%    +0.18%
            >                                       
 Zagreb                1737.48   1740.16    -0.15%    -0.65%
 Belgrade   <.BELEX1    694.15    692.40    +0.25%    -8.87%
            5>                                      
 Sofia                  572.25    571.18    +0.19%    -3.74%
                      BONDS                                 
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
                                                    in
 Czech                                              spread
 Republic                                           
   2-year   <CZ2YT=R    1.7100    0.0150   +228bps     -1bps
            R>                                      
   5-year   <CZ5YT=R    1.7510   -0.0040   +207bps     +0bps
            R>                                      
   10-year  <CZ10YT=    1.8600    0.0150   +167bps     +3bps
            RR>                                     
 Poland                                                     
   2-year   <PL2YT=R    1.3840   -0.0420   +196bps     -6bps
            R>                                      
   5-year   <PL5YT=R    2.2340   -0.0690   +256bps     -6bps
            R>                                      
   10-year  <PL10YT=    2.8230   -0.0210   +264bps     -1bps
            RR>                                     
            FORWARD   RATE      AGREEMEN                    
                                T                   
                      3x6       6x9       9x12      3M
                                                    interban
                                                    k
 Czech Rep                2.12      2.16      2.18      2.01
            <PRIBOR=                                
            >                                       
 Hungary                  0.26      0.49      0.72      0.13
                                                    
 Poland                   1.74      1.74      1.74      1.72
                                                    
 Note: FRA  are for ask prices                              
 quotes                                             
 
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