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Market Summary by AFORTI: Macroeconomic Events of the Week: Inflation, Interest Rates and Economic Data.

8 July 2024

Macroeconomic Situation

The first week of July brought a number of important macroeconomic events that affected global capital and financial markets. Data on inflation, interest rates and economic indicators from the world's largest economies were key for investors.


Macroeconomic Data from Europe

  • Eurozone retail sales: Retail sales rose slightly above forecasts (up 0.3% vs. 0.2% forecasts), indicating some stabilization of consumption in the region. This is an optimistic signal for the eurozone economy.
  • Industrial production in Germany: industrial production recorded a significant decline (-1.6% vs. 0.5% forecast), well below expectations, suggesting difficulties in the industrial sector of Europe's largest economy.
  • Eurozone core inflation: Core inflation came in above expectations, which may suggest inflationary pressures in the region. CPI inflation for June was 2.5% y/y.
  • Inflation in Germany: inflation in Germany fell more sharply than expected (it was 2.2% y/y vs. 2.4% y/y, 2.3% was expected), which may ease concerns about long-term price pressures in the country.
  • PMI data from Europe: PMI readings in Europe disappointed expectations (45.8 vs. 47.3 previously), which may indicate weakening economic activity in the region.

Monetary Policy

  • Monetary Policy Council (MPC): The MPC kept interest rates in line with expectations and indicated that any rate cuts may not occur until 2026 at the earliest. This may indicate a long-term approach to monetary stabilization in Poland .
  • European Central Bank (ECB): The ECB's minutes indicate a conservative approach to monetary policy, meaning that central bankers in the eurozone prefer to be cautious when deciding on interest rate changes.
  • Federal Reserve (FED): FOMC (Federal Open Market Committee) minutes indicate that the Fed needs additional information to decide on possible interest rate cuts, suggesting a cautious approach to monetary policy in the US.


Switzerland's economy

  • Inflation in Switzerland: Inflation came in below expectations (value for June 1.3% vs. 1.4% forecast), which may affect the Swiss National Bank's (SNB) monetary policy decisions .


Foreign Exchange Market

The zloty strengthened in the period from July 01 to 05. The EUR/PLN exchange rate oscillated in the range of 4.28-4.29, and the USD/PLN in the range of 3.95-3.99. The strengthening of the zloty was due to market predictions and the lack of major turmoil in international markets. 

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Oil and Gold Market

Brent crude oil prices on July 01-05 remained in the USD 86.37-86.88 per barrel range, indicating a gentle market uptick after earlier volatility. Gold prices rose from USD 2,355 to USD 2,399 per ounce.


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Stock Exchange

The WIG on July 01-05 recorded a decline of about 1,730 points, ending the session at 87,297 points with a weekly turnover of 4,481,813,545. Investors continue to monitor the macroeconomic situation and central bank decisions, which may affect further movements of the index.

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Summary

The first week of July 2024 brought mixed signals from the world's major economies. Stabilizing retail sales in the eurozone and higher core inflation contrasted with weakening industrial production in Germany. Monetary policy remains cautious in both Europe and the US, indicating a long-term approach to economic stabilization.


TREASURY DEPARTMENT

AFORTI.BIZ

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