Stories that feed markets: OTP, Apple and the US CPI

THE BSE, or Budapest Stock Exchange, had a mixed performance for the week. It started the first part reporting significant losses in line with other international emerging markets like Brazil, South Korea, and other Central and Eastern European bourses. The negative trend turned positive in the second half of the week, when big buyers showed interest in the Hungarian Exchange, specially buying shares of OTP, the largest retail bank in Hungary. OTP accounted for almost half of the total volume of trading for the past days. However, the change in prices for OTP and MOL were not that dramatic. OTP ended the week almost flat, while MOL lost a little more than 1%.
HOLDING THEIR BREATH Investors held their breath after Russia and Belarus broke into an oil war and Russia announced, on the night of January 7, the shutdown of the pipeline that delivers oil to countries like Hungary, Germany, Poland and others. Luckily, the halt lasted only for three days, when Russia then came to terms with Belarus and restarted the flow of petroleum to Europe. The Hungarian oil and gas integrated company, MOL, fell slightly in the beginning of the week. However, MOL was more affected by lower oil prices than by the three-day pipeline oil halt. MOL has its own strategic reserves of crude oil.
NO PANIC In addition to that, the Hungarian government has its own reserves that can supply oil for almost 90 days, so investors did not panic. In general, the international outlook for the financial markets seemed bullish or optimistic; The Dow average finished on Friday at another historical record. US stocks rose the most in more than three months on expectation of profits from technology companies such as Apple Inc. and Microsoft Corp. increasing, as new products prompt consumers and businesses to spend more. The Nasdaq Composite Index, which gets more than two-fifths of its market value from computer-related companies has grown considerably and is now at the high levels not seen since February 2001. The stronger-than-forecasted December retail sales in America suggested that the Federal Reserve may not lower yet interest rates for the first half of the year. However, if interest rates do rise, investors are very likely to sell their stocks and buy into US bonds instead, hurting the stock markets worldwide. Investors have high expectations for today, Thursday, January 18, when the US will publish the year-on-year CPI (consumer price index) figures for core inflation. The expectations are 2.6%. If the CPI figure remains unchanged or if it is lower than the expected 2.6%, it is more than likely that the stock markets and the BSE will benefit as a result.
NEGATIVE SENTIMENT If that number is higher than 2.6%, however, in Hungary we could suffer selling pressure in the stock markets and the BSE could fall on negative sentiment. The negative data in the macroeconomic front increases the chances of a rate increase by the US Federal Reserve, which would make it harder for emerging markets, such as Hungary, to attract further foreign investors.