ZSE: Will American Optimism Awaken Domestic Investors?

On the first working day of the new year, there is a possibility of rising stock prices on the Zagreb Stock Exchange, thanks to optimism in global markets after the ‘fiscal cliff’ was avoided in the USA, although there are currently no significant news from the domestic economy.

Of the 7 analysts from brokerage firms who participated in the Hina survey, 4 expect stagnation of the Crobex today, while 3 expect an increase.

The Crobex index strengthened by 0.09 percent on the last day of the previous year, reaching 1,740 points, while the Crobex10 weakened by 0.19 percent to 971 points. Compared to the beginning of 2012, the Crobex remained unchanged, while the Crobex10 lost 5 points, or 0.5 percent. The regular turnover of shares on the last day of the previous year amounted to 4.9 million kuna.

– After a slight increase in stock prices in the last days of the previous year, thanks to ‘portfolio beautification’, I expect stagnation of the Crobex today as there are no domestic news. However, a slight market increase is also possible, thanks to the avoidance of the ‘fiscal cliff’ in the USA, which will positively affect global stock exchanges. This optimism could somewhat influence trading on the Zagreb Stock Exchange, says Matko Bošković, broker and investment advisor at Centar banka.

On Asian and European stock exchanges, stock prices rose sharply this morning as the ‘fiscal cliff’ was avoided at the last moment in Washington, thus eliminating the risk of recession in the US economy.

Early this morning, the House of Representatives, where Republicans hold the majority, supported a law that will increase taxes on those who earn the most.

The Senate, where Democrats hold the majority, had previously, two hours after the deadline of December 31, overwhelmingly supported a bill to reduce the budget deficit.

The most important factor of the achieved agreement is the increase in the tax rate for households earning more than $450,000 annually from 35 to 39.6 percent, and any cuts to budget expenditures are postponed for two months.

This has removed the danger of automatic cuts to budget expenditures and tax increases, totaling around $600 billion, which could have pushed the economy into recession.
Thanks to this, the MSCI index of Asia-Pacific stocks, excluding Japan, jumped 1.9 percent this morning, reaching its highest level in five months.
There is also optimism in European stock exchanges. The London FTSE, Frankfurt DAX, and Paris CAC indices were up between 1.5 and 1.9 percent at 9:30 AM.