Daily Overview of Global Markets & the SEE Region (Tuesday, 28 May, 2019)
WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: Major European bourses opened higher today on market relief that anti-European parties on the whole failed to outperform as some feared in the European Parliament election. However, their increased support in major economies is expected to have political implications at the individual country level. Against this background, German Bunds extended recent gains with the 10-yr yield falling to a fresh cyclical low of -0.15% earlier today, approaching -0.20% record lows recorded in mid-2016. Turning to the EMU periphery, Spanish and Portuguese sovereign bonds rallied with respective yields falling to record lows after European parliamentary elections showed that pro-EU parties retained a strong majority. Italy was an underperformer amid worries over a renewed confrontation with the European Commission. The 10-yr BTP/Bund yield spread widened close to 288bps, the highest so far this year, while comments by Italy’s Deputy Prime Minister Matteo Salvini that EU fiscal rules must be re-discussed, also weighed on market sentiment towards Italy’s sovereign paper. European Union heads will meet in Brussels today to discuss candidates who will succeed the EU Commission President and the ECB President.
GREECE: Markets reacted positively to the announcement on Sunday night of snap general elections. The 10-yr and 5-yr benchmark yields closed yesterday at all-time lows of 3.119% and 1.953% respectively while the Athens General Index climbed to 776.6 units, a 7% increase from its closing last Friday. Meanwhile, according to press sources, the institutions are considering postponing the publication of the 3rd EPPS review, scheduled for June 5th, on the grounds of not interfering during the pre-election period. In other news, the deadlines for the submission of binding offers for the lignite-fired units of PPC and the casino license of Hellinikon have been moved to 15 July and 28 June respectively.
SOUTH EASTERN EUROPE
CYPRUS: The ruling right-wing party DHSY won the European Parliament elections with a small margin.
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