ZSE: Investor Reaction to Reports Will Continue Today

At the Zagreb Stock Exchange, investor focus today will be on the financial reports of domestic companies, so developments on foreign exchanges are unlikely to have a significant impact on the movement of the Crobex.

All 7 analysts from brokerage firms who participated in the Hina survey expect stagnation of the Crobex today. The Crobex index slipped 0.29 percent yesterday to 1,942 points, close to its lowest level in two months, while the Crobex10 weakened 0.07 percent to 1,091 points. Regular trading in shares reached 22.6 million kuna, about 16.5 million more than the previous trading day.

The increased trading volume is attributed to the reaction of investors to the announcement of quarterly business results from several of the largest domestic companies.

The highest turnover, 11.8 million kuna, was achieved by the shares of HT, whose price fell by 1.90 percent to 210 kuna, after the company reported a decline in profit in the first quarter of more than 34 percent on Tuesday.

Next is the share of Ledo, with a turnover of 2.4 million kuna, and its price rose by 0.17 percent to 8,700 kuna. The shares of Ericsson Nikola Tesla achieved a turnover of 1.5 million kuna, with a price increase of 2.3 percent to 1,540 kuna. The shares of Ina also made it to the millionaire list, with a price increase of 2.21 percent to 4,300 kuna.

– Investors have focused on the financial reports of domestic companies, and their reaction is likely to continue for several more days. Therefore, developments on foreign exchanges will not have a significant impact on the domestic market – says Maja Bešević Vlajo, portfolio manager at Podravska banka. She adds that the slightly increased activity on the stock exchange is encouraging.

– However, we will see where the Crobexes will end the week. Namely, the business results have predictably shown the real economic situation, which is poor – notes Bešević Vlajo. The shares of Podravka could also come into focus for investors after the company announced a call for the General Assembly on June 20. One of the agenda items is also the simplified reduction of share capital by reducing the nominal amount of ordinary shares from 300 to 200 kuna per share.

On Wall Street, stock prices rose about 1 percent on Thursday, as good news from the U.S. labor market and further easing of the European Central Bank’s monetary policy encouraged investors.

The S&P 500 rose 0.94 percent to 1,597 points, a new all-time high, while the Dow Jones strengthened by 0.89 percent and the Nasdaq index by 1.26 percent.

The European Central Bank lowered its key interest rate yesterday by 0.25 percentage points to a record low of 0.50 percent, stating that further measures are possible if necessary to pull the eurozone out of recession.

The ECB’s measures followed the decision of the U.S. Federal Reserve the day before to continue purchasing government and mortgage-backed securities at a rate of $85 billion per month to maintain low interest rates and thus stimulate economic growth.

Investors were also encouraged by the data that the number of unemployment claims fell by 18,000 last week to 324,000, the lowest level since the beginning of the recession from 2007 to 2009, indicating a recovery in the U.S. labor market.

Asian markets also saw stock prices rise this morning, while European exchanges are trading cautiously ahead of the release of key employment reports in the U.S.

– New guidelines for investors on foreign exchanges will be provided today by the key employment report in the U.S. Economists estimate that 140,000 new jobs were created in April, following 88,000 in March. However, most economists expect that macroeconomic indicators will soon begin to weaken, reflecting cuts in budget spending in the U.S. – concludes Bešević Vlajo.