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Romanian stocks, leu outperform on rate hike expectation

Romanian stocks, leu outperform on rate hike expectationBUDAPEST: Romanian shares and the leu outperformed Central European peers on Friday due to a good earnings report from BRD bank and expectations for a central bank interest rate hike on Monday.

The leu traded at 4.659 against the euro at 0816 GMT, firming 0.2 percent.

Other Central European currencies firmed less, while the most liquid units, the zloty and the forint eased slightly.

After a slump in regional currencies and stock prices earlier this week due to a rally of the dollar, local factors came into the focus as investors await US payroll figures due at 1230 GMT.

Five out of eight analysts projected in a Reuters poll last month that the Romanian central bank would increase its benchmark interest rate further at its May 7 meeting, by a quarter percentage point to 2.5 percent.

While the region’s equity markets were mixed, Bucharest’s main index led gainers, rising by 0.6 percent.

It was driven by almost 2 percent rise in the shares of two banks, Banca Transilvania and Societe Generale unit BRD.

BRD reported a 26 percent annual jump in the group’s first-quarter net profit.

Warsaw led regional stock losers, with its blue-chip index shedding 1.3 percent. Poland had a national holiday on Thursday, and thus its bourse missed a regional equities decline after the Federal Reserve signalled further rate tightening on Wednesday.

Prague’s main index fell 1.2 percent, knocked down by an almost 5 percent plunge in Erste bank.

Austrian-based Erste Group reported an annual surge in first-quarter net profit, but an increase in its costs overshadowed that result.

Hungarian oil group MOL shed 4 percent after mixed results, but Budapest’s main index rose 0.6 percent.

The index was helped by a rebound in OTP Bank shares to near 11,000 forints, the support line it pierced in a plunge on Wednesday.

Romanian government bonds underperformed the region.

The yield on 10-year paper was bid at 4.66 percent, up two basis points, while Hungary’s corresponding yield was flat at 2.57 percent, and the Polish yield — which misses a regional decline on Thursday — dropped 4 basis points to 3.127 percent.

Czech bonds moved sideways, while the crown firmed 0.1 percent to 25.496 against the euro.

The Czech central bank projected it may lift interest rates further only near the end of 2018.

But some market participants continue to expect an earlier rise as the crown is far from 24.6, the quarterly average projected by the bank for the last quarter of the year.

Copyright Reuters, 2018

Source: Brecorder

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