The Zagreb Stock Exchange is expected to see stagnation in the index today, likely with a negative sign, judging by movements in global markets, where profit-taking on stocks has continued.
Of the 8 analysts from brokerage firms who participated in Hina’s survey, 6 expect stagnation in Crobex today, while 2 anticipate a decline. The Crobex index weakened by 0.38 percent yesterday, to 1,869 points, while Crobex10 fell by 0.18 percent, to 987 points. Regular trading amounted to 15.6 million kuna, što is about 8.5 million kuna less than the previous day. "In the absence of news from the economy, the domestic market, as in previous days, will follow the movements in global markets, which are not positive today," says Goran Vorkapić, broker and investment advisor at Centar banka. He adds that there has been a noticeable increase in activity from certain companies filling their treasury and pension funds recently. "However, we will only see a real revival of activity in the domestic market if a positive trend continues in global markets," Vorkapić notes. On global markets, profit-taking has followed. Thus, Tuesday, the first working day of the week on Wall Street, given that there was no trading on Monday due to the holiday, brought a correction in stock prices after they recorded the largest jump in the last two months last week. This morning, leading indices on Asian markets also weakened, particularly the Japanese Nikkei index.
"After the rise in stock prices on global markets in the last three days of last week by approximately 6 percent, a slight cooling of investor enthusiasm was expected. Long-term, the consolidation of profits is positive, as aggressive stock price growth is not justified by fundamentals. However, I am not pessimistic about further market movements," emphasizes Vorkapić. As announced in the media, U.S. President Barack Obama will propose a $100 billion tax credit for companies today to stimulate the struggling U.S. economic recovery. His proposal also includes raising and permanently increasing tax credits for research and development. "As there are no significant macroeconomic announcements in the U.S. today, investor focus could be on the announcement of a new package of stimulative fiscal measures from the U.S. government," notes Vjeran Jureša, an analyst at the investment company To One. The S&P 500 weakened by 1.15 percent yesterday, to 1,091 points. "The U.S. S&P index is moving in a range from 1,030 to 1,150 points, and whether it will break below or above soon will depend on new economic news. Although technical indicators are positive, as a reverse ‘head and shoulders’ pattern is forming, I believe there is a higher probability that the market will remain within the previous trading framework due to an uncertain fundamental picture. I also believe that by the end of the year, political-economic news will be the main focus for investors," Jureša assesses. Given the movements in foreign markets, Jureša expects the continuation of Crobex stagnation today, with a negative sign. (H)
