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CEE MARKETS-Stock markets give up early gains as virus fears eclipse U.S. stimulus

(Updates markets, adds Czech bond auction,...


(Updates markets, adds Czech bond auction, Hungary tender) By Anita Komuves and Jason Hovet BUDAPEST/PRAGUE, March 25 (Reuters) – Early gains in Central European stock markets mostly melted away on Wednesday, as investors’ optimism over a $2 trillion economic stimulus bill in the United States faded and fears over the coronavirus pandemic took hold of markets again. The U.S. stimulus package lifted market sentiment around the world earlier on Wednesday. It includes a large increase in unemployment insurance and hundreds of billions of dollars to aid companies harmed by the outbreak. Prague’s equities were still up 2% on the day by 1315 GMT, after a more than 7% jump in the morning. Bucharest’s index was up 2.2%, while stocks in Budapest were up less than 1% after an initial rise of more than 3%. Warsaw’s stocks were down 0.88%. The Czech Finance Ministry sold a total of 53.4 billion crowns ($2.11 billion) of three types of bonds, several times more than planned, at a Wednesday auction as it ramps up borrowing. The government plans a five-fold increase in the 2020 state budget deficit to fight the economic impact of the coronavirus and is boosting bond issuance to finance it. One dealer said the demand was the largest ever and the amount sold showed the ministry needed the money. “They utilised demand in quite a fashion,” the dealer said. Hungary’s central bank announced its first new collateralised loan tenders on Wednesday, offering liquidity to banks at a fixed rate of 0.9% on various maturities. The bank offered one-week, 3-month, 6-month, 12-month loans, as well as loans for 3 years and 5 years to commercial banks. The results will be announced later on Wednesday. This was the first tender of the NBH’s new liquidity-boosting instrument, which was announced on Tuesday. The bank left interest rates unchanged on Tuesday, as expected, and introduced the new fixed-rate collateralised loan instrument with unlimited liquidity. “This tool will be able to stabilize not only lending, but also the government securities market … and this is what we have seen today,” Deputy Governor Marton Nagy said, referring to a drop in yields, especially at the long end of the yield curve on Tuesday. Five- and 10-year government bond yields dropped in Hungary by more than 50 basis points on Tuesday before the NBH’s announcements, anticipating the measures, analysts say. Yields on 10-year Hungarian bonds were up by 20 basis points on Wednesday, a fixed income trader in Budapest said. The Hungarian forint eased 0.14% on Wednesday and was trading at 355.00, continuing its slip from the day before in reaction to the NBH’s measures. Central European governments have announced a series of emergency measures recently to counter the economic blow from lockdowns, production halts and disruption to business activity and supply chains. The Czech, Polish and Romanian central banks have cut their benchmark rates and announced steps to shore up economic activity. Elsewhere, the Czech crown was up, gaining 0.84% and trading at 27.463 to the euro. The zloty gained 0.53% and was trading at 4.582. The Romanian leu firmed 0.2% and was trading at 4.834 to the euro. CEE SNAPSHO AT MARKETS T 1415 CET CURRENC IES Latest Previou Daily Change s bid close change in 2020 EURCZK Czech <EURCZK 27.4630 27.6950 +0.84% -7.40% = crown => EURHUF Hungary <EURHUF 355.000 354.500 -0.14% -6.72% = forint => 0 0 EURPLN Polish <EURPLN 4.5823 4.6065 +0.53% -7.11% = zloty => EURRON Romanian <EURRON 4.8345 4.8445 +0.21% -0.96% = leu => EURHRK Croatian <EURHRK 7.6060 7.6115 +0.07% -2.11% = kuna => EURRSD Serbian <EURRSD 117.380 117.545 +0.14% +0.16% = dinar => 0 0 Note: calculated from 1800 daily CET change Latest Previou Daily Change s close change in 2020 .PX Prague 810.42 794.740 +1.97% -27.36% 0 .BUX Budapest 32820.2 32614.5 +0.63% -28.78% 0 6 .WIG20 Warsaw <.WIG20 1438.19 1451.02 -0.88% -33.11% > .BETI Buchares 7639.44 7472.17 +2.24% -23.43% t .SBITO Ljubljan <.SBITO 734.44 706.27 +3.99% -20.67% P a P> .CRBEX Zagreb <.CRBEX 1405.76 1403.99 +0.13% -30.32% > .BELEX Belgrade <.BELEX 629.80 616.31 +2.19% -21.44% 15 15> .SOFIX Sofia <.SOFIX 424.82 418.88 +1.42% -25.23% > Yield Yield Spread Daily (bid) change vs Bund change in Czech spread Republic CZ2YT= 2-year <CZ2YT= 1.2750 0.0410 +188bp +1bps RR RR> s CZ5YT= 5-year <CZ5YT= 1.5240 0.0810 +201bp +6bps RR RR> s CZ10YT <CZ10YT 1.5320 -0.0220 +182bp -5bps =RR 10-year =RR> s Poland PL2YT= 2-year <PL2YT= 0.9560 0.0230 +156bp -1bps RR RR> s PL5YT= 5-year <PL5YT= 1.3640 0.0240 +185bp +0bps RR RR> s PL10YT <PL10YT 1.8810 0.0840 +217bp +5bps =RR 10-year =RR> s FORWARD 3×6 6×9 9×12 3M interba nk Czech <CZKFRA 0.69 0.40 0.47 1.74 Rep ><PRIBO R=> Hungary <HUFFRA 0.47 0.38 0.39 0.50 ><BUBOR => Poland <PLNFRA 0.63 0.47 0.46 1.17 ><WIBOR => Note: are for ask FRA prices quotes (Additional reporting by Jason Hovet in Prague and Alan Charlish in Warsaw; editing by Larry King and Alex Richardson)



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