Due to Annual Vacations, Focus on the Most Liquid Issues

Today, a low trading volume is expected on the Zagreb Stock Exchange, as in previous days, since most market participants are absent due to annual vacations, and the Crobex indices should not record significant changes.

Of the 6 analysts from brokerage firms who participated in Hina’s survey, 5 expect stagnation of the Crobex today, while 1 expects an increase.

The Crobex index strengthened by 0.13 percent yesterday, reaching 1,829 points, thus breaking a 5-day negative streak. The Crobex10 index rose by 0.18 percent, achieving gains for the second consecutive day.

However, regular trading volume remained low, amounting to 4.64 million kuna, as it did on Friday.

“On the domestic market, we expect a low trading volume today, just like in previous days, which is in line with this time of year when most investors are on annual vacation. Therefore, indices may continue to stagnate, and since there are no significant business announcements, the focus will mainly be on the usually most liquid issues,” says Nada Harambašić Nereau, a financial analyst at Raiffeisenbank Austria.

A weaker trading volume is also present on foreign exchanges. Thus, with weak trading, on Wall Street on Monday, the Dow Jones and S&P 500 indices deepened their losses after last week’s largest declines since June, while the Nasdaq managed to finish trading in positive territory, thanks to the rise in stock prices of Apple and BlackBerry.

Many traders are on annual vacation in August, and the corporate earnings announcement season is coming to an end, so markets are entering the usual seasonal quiet phase.

The Dow Jones index weakened by 0.04 percent yesterday, to 15,419 points. The S&P 500 index fell by 0.12 percent, to 1,689 points, while the technology Nasdaq strengthened by 0.27 percent, to 3,669 points.

This morning, a media report that Japanese Prime Minister Shinzo Abe is considering lowering the corporate tax rate lifted stock prices on Asian exchanges, especially on the Tokyo Stock Exchange. The Tokyo Nikkei index is up 2.57 percent.

“For now, it seems that indices will rise on European exchanges as well. However, the tone of sentiment on European exchanges today will be set by important macroeconomic announcements. We expect data on industrial production in the Eurozone for June and the German ZEW index of investor confidence. A little later, data on retail sales in the U.S. will also provide guidance to investors,” notes Harambašić Nereau.

As she adds, trading will be cautious, as investors eagerly await data on the Eurozone GDP and the largest European economies – Germany and France – for the second quarter, which will be released tomorrow.

It is estimated that the Eurozone economy grew by 0.2 percent, thus finally emerging from the recession that began at the end of 2011.