By: The Quinnipiac University Economics Research Team, Jack French
The first week of June extended the market rally while the tumultuous past few days have reignited fears. A number of indices were up more than six percent at one point early last week before dropping suddenly and severely on Thursday or Friday. There was something of a rebound to finish the week and only the Romanian BET lost substantial ground but a drop like that hadn’t been seen since March. The Hungarian BUX ended up leading the way for the CEE countries but only fractionally. The BUX, PX, and WIG 20 all finished with gains of about four percent. The BET dropped almost three percent and the Slovakian SAX fell just about a quarter of a percent. For comparison, the US S&P 500 fell sharply near the end of the week but ended up roughly flat for the last two weeks. The UK FTSE fared slightly better and ended the week up about half a percent. The SAX and BET underperformed the benchmarks while the rest of the CEE countries outperformed by over three percent.
Source: Own calculations based on data collected from each index. This graph shows the performance of each index with the reference date of February 17th.
The last three months now represent a sizable rally for CEE markets. The SAX has remained above its pre-crisis level while the rest of the CEE countries have continued their own recovery. Despite some ups and downs, markets have been trending upwards fairly steadily since March. The US S&P 500’s recovery still outpaces the UK FTSE 100 and CEE markets with the exception of the SAX. At its high point last week the S&P was within 5% of its pre-crisis level. The closest any CEE index has gotten so far has been the Romanian BET on June 4th when it was 10.75% below. The Hungarian BUX remains near the bottom for CEE countries while the Polish WIG 20, which had been near the bottom for nearly the entire time has jumped up a bit as the CEE indices seem to be converging.
More ups and downs are to be expected given the current circumstances. Despite the sudden drop in the US market last Thursday that was shared by most CEE indices, the indices are well above their respective lows going back to mid-March. There would have to be significant further losses for a definite trend reversal to become clear.
Source: Own calculations based on data collected from each index. The first graph shows the previous week’s performance. The remaining graphs show the three-month performance of each of the indices.
Note: The index calculation (top graph) has been changed to reflect movement over the weekend and during Monday. The reference point for the indices is now Friday’s closing price.