Market Summary by AFORTI: Crypto week, escalation between Israel and Syria, stock market highs, ECB interest rates
Last week on the financial markets was characterised by new historic highs on the US and Polish stock exchanges and tensions in international trade. President Donald Trump announced a plan to introduce 30% tariffs on imports from the EU and Mexico, with the planned entry into force on 1 August. In addition, the US held ‘Cryptocurrency Week’, during which the GENIUS Act, a key piece of legislation for the industry concerning stablecoins, landed on the president's desk. The euro weakened against the zloty, while the dollar strengthened against the Polish currency. The price of BRENT oil and gold fell, while the WIG index and the price of Bitcoin rose, reaching new records.
Economic indicators
Poland
1. Current account balance (EUR) (May): value -1740M; forecast -785M; previously -596M
2. CPI (m/m) (June): value 0.1%; forecast 0.1%; previously -0.2%
3. CPI (y/y) (June): value 4.1%; forecast 4.1%; previously 4.0%
4. Core CPI (y/y) (June): value 3.4%; forecast 3.4%; previously 3.3%
Eurozone
1. ZEW index of current economic conditions in Germany (July): value -59.5; forecast -65.5; previously -72.0
2. Industrial production (m/m) (May): value 1.7%; forecast 1.1%; previously -2.2%
3. Trade balance (May): value 16.2B; forecast 13.9B; previous 11.1B
4. CPI (y/y) (June): value 2.0%; forecast 2.0%; previous 1.9%
5. CPI (m/m) (June): value 0.3%; forecast 0.3%; previously 0.0%
6. PPI in Germany (m/m) (June): value 0.1%; forecast 0.1%; previously -0.2%
Germany
1. ZEW Index of Current Economic Conditions in Germany (July): value -59.5; forecast -65.5; previous -72.0
2. ZEW Economic Sentiment in Germany (July): value 52.7; forecast 50.8; previous 47.5
3. PPI in Germany (m/m) (June): value 0.1%; forecast 0.1%; previous -0.2%
4. PPI index in Germany (y/y) (June): value -1.3%; forecast -1.3%; previously -1.2%
United Kingdom
1. Core CPI (y/y) (June): value 3.7%; forecast 3.5%; previous 3.5%
2. CPI (y/y) (June): value 4.3%; forecast none; previous 4.1%
3. Jobless claims (June): value 25.9K; forecast 17.9K; previous 15.3K
4. Employment change 3m/3m (m/m) (May): value 134K; forecast 46K; previous 89K
5. Unemployment rate (May): value 4.7%; forecast 4.6%; previously 4.6%
USA
1. Core CPI (m/m) (June): value 0.2%; forecast 0.3%; previously 0.1%
2. CPI (m/m) (June): actual 0.3%; forecast 0.3%; previous 0.1%
3. CPI (y/y) (June): value 2.7%; forecast 2.6%; previous 2.4%
4. Core PPI (m/m) (June): value 0.0%; forecast 0.2%; previous 0.4%
5. PPI (m/m) (June): actual 0.0%; forecast 0.2%; previous 0.3%
6. Initial jobless claims: actual 221K; forecast 233K; previous 228K
7. Philadelphia Fed Manufacturing Index (July): actual 15.9; forecast -1.2; previous -4.0
8. Philadelphia Fed Employment Report (July): actual 10.3; forecast none; previous -9.8
9. Retail sales (m/m) (June): actual 0.6%; forecast 0.1%; previous -0.9%
10. Michigan Consumer Sentiment Index (July): actual 61.8; forecast 61.4; previous 60.7
China
1. Import balance (y/y) (June): value 1.1%; forecast 1.3%; previously -3.4%
2. GDP (y/y) (Q2): value 5.2%; forecast none; previously 5.4%
3. Industrial production (y/y) (June): actual 6.8%; forecast 5.6%; previous 5.8%
4. Retail sales (y/y) (June): actual 4.8%; forecast 5.2%; previous 6.4%
5. NBS press conference: value none; forecast none; previously none
Currency market
This week, the euro (EUR) weakened against the zloty (PLN) after initial gains. The euro price fluctuated between 4.2401 and 4.2705.
On the other hand, the dollar (USD) strengthened against the zloty (PLN) by 0.15 after significant fluctuations. The price of the dollar fluctuated between 3.6326 and 3.6835.
Oil and gold market
The price of BRENT crude oil fell by 1.93%. The price fluctuated between 67.80 and 71.51 USD/barrel.
Similarly, gold fell by 0.43%. The price of gold fluctuated between 3216.27 and 3388.20 USD/ounce.
Stock exchange
The WIG index recorded a significant increase of 3.16%, reaching another historic high. The value of the WIG index fluctuated between 104,659 and 108,848.
Cryptocurrencies
The price of Bitcoin (BTC) rose by 1.05%, reaching an all-time high in dollar terms of $122,838. The price of Bitcoin fluctuated between PLN 417,500 and PLN 441,755.
Important events of the past week
Crypto week in the USA: Last week, the United States hosted ‘Cryptocurrency Week,’ which proved fruitful for the crypto industry. The GENIUS Act, concerning stablecoins, landed on President Trump's desk after gaining bipartisan support in several rounds of amendments. It is set to take effect 18 months after signing or after the final regulations are published. The House of Representatives also passed the CLARITY Act, regulating market structure, and a bill prohibiting the Federal Reserve from issuing a central bank digital currency (CBDC). Although the GENIUS Act did not include all of the industry's demands, cryptocurrency leaders remain optimistic about the full integration of cryptocurrencies into the US financial system.
Israel-Syria escalation: On Wednesday, Israeli drones carried out an attack on the Syrian army headquarters in Damascus, injuring two civilians. At the same time, the conflict in the Syrian region of Suwayda is escalating, where the Syrian army, sent to restore order, clashed with Druze fighters and Bedouins. Israel has reinforced its forces on the border with Syria after the Druze attempted to cross the border, demanding intervention to defend their community. In a gesture of solidarity, Israeli Druze leaders announced a strike, calling on their compatriots to be ready to cross the border and provide assistance.
USA-EU/Mexico Trade Tensions: US President Donald Trump announced a plan to impose 30% tariffs on imports from the European Union and Mexico, effective 1 August. These rates are higher than those originally announced for the EU and Japan, reflecting a tightening of trade policy. In response, the European Commission has proposed retaliatory tariffs on US imports worth €72 billion, modifying the initial list of products. These trade tensions are seen as part of the pressure in the ongoing trade talks, with Europe negotiating hard.
Stock markets at historic highs: Last week, the S&P 500 and Nasdaq indices in New York climbed to new historic highs, reflecting the strong health of the US stock market. At the same time, in Warsaw, the broad market WIG index also reached new all-time highs, with the WIG20 exceeding 2,900 points. Goldman Sachs analysts predict that interest rate cuts in the USA, a weaker dollar and attractive valuations will help emerging market stock exchanges continue to grow. This positive trend is also driven by the appetite of mainly foreign investors for Polish stocks.
Events worth watching this week
ECB decision and the euro exchange rate: This Thursday, 24 July, will bring the European Central Bank's decision on interest rates, which is a key event for the euro exchange rate. Although forecasts assume that rates will remain at their current level, the market will be looking for signals about the future, where announcements of further cuts could weaken the currency. On the other hand, a more decisive tone, indicating a reluctance to further cut interest rates, could result in an increase in the value of the euro. The final direction for the currency will be shaped by the content of President Christine Lagarde's press conference.
Data from Poland and the zloty: On Monday, 21 July, a series of data from the Polish economy will be published, which may affect the valuation of the zloty. Forecasts suggest a possible slowdown in production growth with continued strong wage growth, so readings better than these assumptions could be an argument for an increase in the value of the Polish currency. Data weaker than the consensus, on the other hand, could contribute to a weakening of the zloty, especially in an environment of global uncertainty. However, the market reaction will also depend on the overall sentiment of foreign investors.
TREASURY DEPARTMENT
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