Market Summary by AFORTI: Decline in Brent crude oil and gold prices, WIG down around 2100 points and stable EUR/PLN, USD/PLN rates
Macroeconomic Situation
The fourth week of July brought a number of important developments that affected global equity and financial markets. Data on inflation, interest rates and economic indicators from the world's largest economies were key for investors.
Poland
- Retail sales: retail sales in Poland came in weaker than expected, which may influence further monetary policy decisions by the National Bank of Poland (NBP). Poland's retail sales for June are up 4.7% y/y. This is well below the consensus of 6.0% y/y and 5.5% y/y in May
Europe
- Germany: German consumer sentiment (GfK) was higher than expected, suggesting an improvement in economic health. However, the Ifo business sentiment index was below expectations, which may indicate some pessimism among businesses.
- Eurozone, PMI data for July. Current: 50.1 Expected 50.9 vs 50.8 in June. Preliminary PMI data from the eurozone was disappointing, causing the euro to weaken.
- UK: Preliminary PMI data came in slightly above expectations, which had a positive impact on market sentiment. Preliminary UK PMI for July: 52.7 (forecast 52.6, previous 52.3)
- Turkey: the Bank of Turkey kept interest rates unchanged, as expected, indicating a continuation of the current monetary policy. The interest rate currently stands at 50.00%
USA
- GDP data: Q2: Current: 2.8% q/q; forecast 2.0% q/q; previously 1.4% q/q;
- House sales: Secondary home sales fell more sharply than expected, which may indicate a weakening property market. However, US GDP data was strong, strengthening the dollar and putting pressure on the gold market.
- Preliminary PMI data: for manufacturing was below expectations, which may suggest some slowdown in the manufacturing sector. US composite PMI for July (preliminary): Value: 55, Previously: 54,6
Currency market
The zloty was basically little changed between 22 and 26 July. The EUR/PLN exchange rate oscillated in a range of 4.27, reaching 4.297 at times, and the USD/PLN in a range of 3.93-3.94, reaching 3.96 at times.
Oil and gold market
Brent crude oil prices from 22-26 July remained in the USD 82.88-80.65 per barrel range, indicating a market decline. Gold prices fell slightly from USD 2,405 to USD 2,386 per ounce.
Stock market
The WIG fell by around 2,100 points between 22 and 26 July, ending the session at 83,713 points with a weekly turnover of 5,217,174,005. Investors continue to monitor the macroeconomic situation and central bank decisions that may influence further movements of the index. It was a week of declines on the WSE.
Summary
The fourth week of July 2024 brought mixed signals from the world's major economies. Improved consumer sentiment in Germany contrasted with disappointing PMI data from the eurozone. In the US, strong GDP data strengthened the dollar, putting pressure on the gold market. Monetary policy in Turkey remains unchanged and weaker retail sales in Poland may influence future NBP decisions. Investors continue to keep a close eye on the macroeconomic situation and central bank decisions, which may influence further market movements. The coming week is filled with a large number of macroeconomic events. The FOMC will announce its interest rate decision on Wednesday evening, followed by the US NFP report for July on Friday. While the Fed is not expected to change the level of interest rates, this could give clues as to whether or not a rate cut will occur in September. We also await interest rate decisions from the Bank of Japan (Wednesday) and the Bank of England (Thursday). Economists expect the Bank of England to cut interest rates by 25 basis points, but money markets are pricing in a less than 50% chance of such a move. Meanwhile, economists expect the Bank of Japan to keep interest rates unchanged, but money markets see about a 65% chance that the Bank will raise them by 10 basis points.