August 5, 2019 / 8:46 AM / 6 months ago

CEE MARKETS-Assets ease across Central Europe amid global gloom

    By Krisztina  Than
    BUDAPEST, Aug 5 (Reuters) - Central European assets extended
falls on Monday morning as global markets were gripped by
concerns over an escalation of the U.S.-China trade war, which
has boosted risk aversion.
    Local factors had little role in driving emerging markets in
the European Union's eastern wing on Monday. 
    Stock markets fell, and currencies eased across the board. 
    Romania's central bank is widely expected to keep rates
unchanged at 2.5% at a meeting later in the day. 
    Helped by loose policies by major global central banks,
Central Europe's rate-setters have adopted a wait-and-see mode
lately despite a rise in inflation earlier this year.
    "The new week begins with continuing negative moods. The
escalation of trade wars and concerns about global economic
growth, fueled by successive U.S. tariffs imposed on China have
a negative impact on market sentiment," Bank Millennium said in
a note.
    "The zloty remains under pressure to weaken."
    The bank said the continuation of risk aversion could result
in a further easing of the Polish currency towards the next
technical barrier which is at 4.34 versus the euro.
    The Hungarian forint was hovering around 327.60 to the euro
and some analysts said the currency could head towards all-time
lows around 330 if negative sentiment prevails.
    At 0813 GMT, the forint was down 0.16% against the
euro at 327.60. The Polish zloty shed 0.24% to 4.3165.
The Czech crown was at 25.7710, flat from Friday's
    "The crown remains at weaker levels around 25.75 per euro,
where it got after a hawkish Fed and the announcement of a new
wave of U.S. tariffs against China. Trade wars will be a theme
for the region this week too and we assume that the crown could
test once again the level of 25.80," CSOB analysts said in a
morning note.
    Last Thursday, the Czech National Bank (CNB) left its
two-week repo rate at 2.00%, and signalled rates
would remain unchanged in coming quarters, as momentum in the
domestic economy offsets monetary easing abroad.
    Coming just after Federal Reserve Chairman Jerome Powell
suggested the first U.S rate cut in over a decade was not the
start of a lengthy series, U.S. President Donald Trump's
announcement on Thursday about new tariffs on Chinese imports
was a fresh blow to risk-sensitive emerging-market assets.

            CEE        SNAPSHOT   AT                         
            MARKETS              0959 CET            
                       Latest    Previous  Daily     Change
                       bid       close     change    in 2019
 Czech                  25.7710   25.7600    -0.04%    -0.25%
 Hungary               327.6000  327.0700    -0.16%    -1.99%
 Polish                  4.3165    4.3060    -0.24%    -0.62%
 Romanian                4.7333    4.7300    -0.07%    -1.68%
 Croatian                7.3800    7.3805    +0.01%    +0.41%
 Serbian               117.5800  117.7000    +0.10%    +0.61%
 Note:      calculated from                1800 CET          
                       Latest    Previous  Daily     Change
                                 close     change    in 2019
 Prague                 1031.78  1040.370    -0.83%    +4.58%
 Budapest              40137.10  40309.61    -0.43%    +2.55%
 Warsaw                 2199.52   2216.51    -0.77%    -3.39%
 Bucharest              9041.53   9068.90    -0.30%   +22.45%
 Ljubljana               867.26    870.99    -0.43%    +7.83%
 Zagreb                 1904.28   1904.28    +0.00%    +8.89%
 Belgrade   <.BELEX15    734.81    738.32    -0.48%    -3.53%
 Sofia                   581.59    580.08    +0.26%    -2.16%
                       Yield     Yield     Spread    Daily
                       (bid)     change    vs Bund   change
 Czech                                               spread
   2-year   <CZ2YT=RR    1.0470   -0.0080   +184bps     +0bps
   5-year   <CZ5YT=RR    1.0220    0.0420   +180bps     +6bps
   10-year  <CZ10YT=R    1.0890   -0.0150   +161bps     +1bps
   2-year   <PL2YT=RR    1.5250   -0.0180   +232bps     -1bps
   5-year   <PL5YT=RR    1.7600   -0.0640   +254bps     -5bps
   10-year  <PL10YT=R    2.0410   -0.0540   +256bps     -3bps
            FORWARD    RATE      AGREEMEN                    
                       3x6       6x9       9x12      3M
 Czech Rep          <      2.11      1.97      1.84      2.16
 Hungary            <      0.32      0.36      0.40      0.26
 Poland             <      1.73      1.70      1.69      1.72
 Note: FRA  are for ask prices                               
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 (Reporting by Krisztina Than, additional reporting by Alan
Charlish in Warsaw and Robert Muller in Prague;
Editing by Andrew Cawthorne)
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