Market Summary by AFORTI: Impact of the election on the zloty, recommendation of tariffs on the EU, ‘One Big Beautiful Bill’ law

Economic indicators

Poland

1. Corporate sector payrolls (y/y) (Apr): 9.3%; forecast 8.1%; previously 7.7%

2. Employment growth (y/y) (Apr): -0.9%; forecast -0.8%; previously -0.9%

3. industrial production (y/y) (Apr): 1.2%; forecast 0.7%; previously 2.4%

4. PPI (y/y) (Apr): value -1.5%; forecast -1.4%; previously -1.0%

5. M3 money supply (y/y) (Apr): value 10.4%; forecast 10.0%; previously 10.3%

Eurozone

1. CPI (m/m) (Apr): 0.6%; forecast 0.6%; previously 0.6%

2. CPI (y/y) (April): -2.2%; 2.2% ahead; 2.2% previously

3. Germany's GDP (k/k) (Q1): volume 0.4%; forecast 0.2%; previously -0.2%

4. German PPI (m/m) (Apr): -0.6%; forecast -0.3%; previously -0.7%

5. German Current Situation Index (May): value 86.1; forecast 86.8; previously 86.4

6. Ifo Business Sentiment Indicator for Germany (May): value 87.5; forecast 87.4; previously 86.9

Germany

1. German PPI (m/m) (April): value -0.6%; forecast -0.3%; previously -0.7%

2. German Current Situation Index (May): value 86.1; forecast 86.8; previously 86.4

3. Ifo Business Sentiment Indicator in Germany (May): value 87.5; forecast 87.4; previously 86.9

4. Germany PMI (May) P: 48.8; forecast 48.8; previously 48.4

5. Germany's GDP (k/k) (Q1): 0.4%; forecast 0.2%; previously -0.2%

6. Germany's GDP (y/y) (Q1): 0.0%; forecast -0.2%; previously -0.2%

France

1. France manufacturing PMI (May) P: value 49.5; forecast 48.9; previously 48.7

2. S&P Global manufacturing PMI in France (May): value: 48.0; forecast 48.0; previously 47.8

3. French consumer confidence index (May): value 88; forecast 93; previously 91

United Kingdom

1. CPI (m/m) (April): value 1.1%; forecast 1.2%; previously 0.3%

2. CPI (y/y) (April): value 3.5%; forecast 3.3%; previously 2.6%

3. Composite PMI (May) P: value 49.4%; forecast 49.3%; previously 48.5%

4. Services PMI (May): value 50.2%; forecast 50.0%; previously 49.0%

5. core retail sales (y/y) (Apr): 5.3%; forecast 4.4%; previously 2.6%

6. core retail sales (m/m) (Apr): value 1.3%; forecast 0.3%; previously 0.2%

USA

1. USA leading index (m/m) (April): value -1.0%; forecast -0.7%; previously -0.8%

2. crude oil inventories: value 1.328M; forecast -0.900M; previously 3.454M

3. declared initial jobless: value 227K; forecast 230K; previously 229K

4. PMI for industry (May) P: value 52.3%; forecast 49.9%; previously 50.2%

5. PMI for services (May) P: value 52.3%; forecast 51.0%; previously 50.8%

6. Pending home sales (April): value 4.00M; forecast 4.15M; previously 4.02M

7. new property sales (April): value 743K; forecast 694K; previously 670K

China

1. fixed asset investment (y/y) (April): value 4.0%; forecast 4.4%; previously 4.2%

2. industrial production (y/y) (April): value 6.1%; forecast 5.7%; previously 7.7%

3. China industrial production, cumulative (y/y) (Apr): 6.4%; prev. 6.5%

4. retail sales in China, cumulative (y/y) (Apr): value 3.73%; forecast 5.2%; previously 3.61%

5. China unemployment rate (April): value 5.1%; forecast 5.2%; previously 5.2%

6. PBoC key lending rate (May): value 3.50%; forecast 3.50%; previously 3.60%

Foreign exchange market

The euro (EUR) weakened against the zloty (PLN) this week following uncertainty surrounding the elections. The euro price fell by 0.39% and oscillated between 4.2340 and 4.2888.

Similarly, the dollar (USD) weakened against the zloty (PLN) by 2.13%. The dollar price oscillated between 3.7335 and 3.8362.

Oil and gold market

The price of BRENT crude oil fell by 0.55% and oscillated in the range of USD 63.38 - 66.60/barrel. 

The gold price increased by 4.68% and oscillated in a range of USD 3207.05 - 3357.20/ounce.

Stock market

The valuation of the WIG index rose by 2.88% and oscillated in a range of 97,125 - 99,926 with a strong decline after Trump's recommendation of tariffs on the EU.

Cryptocurrencies

The price of Bitcoin (BTC) rose by 2.14%, oscillating in the range of 394 054 - 404 800. This week, Bitcoin reached a historic high to the dollar, surpassing US$111,000.

Important events of the past week

Reaction to the Polish elections: Investors in Poland focused on the results of the first round of the presidential elections, which were inconclusive, marking the need for a second round on 1 June 2025. Immediately after the official results were announced, the domestic markets reacted with a weakening of the zloty and declines on the Stock Exchange. The outcome of the first round, especially the surprisingly high support for the candidates of the far right, introduced an element of political uncertainty, which contributed to negative sentiment. However, the market reaction proved to be short-lived, and the zloty and stock indices quickly recovered some of the losses.

USA credit rating downgrade: Moody's has downgraded the credit rating of the United States. The deteriorating state of the USA's public finances, the lack of corrective action and the risk of further increases in the deficit were cited as the main justification for this decision. Although other agencies, such as Fitch and S&P, had already taken similar steps, financial markets reacted to the news from Moody's. The downgrade translated into a rise in US bond yields, as well as declines in the dollar and stock indices.

The ‘One Big Beautiful Bill’: On Thursday, the USA House of Representatives passed a controversial tax and budget bill, dubbed the ‘One Big Beautiful Bill’. Among other things, the bill includes an extension of the 2017 tax cuts, new tax exemptions and increased military spending, while assuming cuts to social programmes. The total cost of the reform over a decade is estimated at US$3.8 trillion, raising serious concerns about future growth in the budget deficit. According to analysts, the bill's impact on the deficit could challenge the stability of the USA budget and potentially weigh on the US dollar's quotations in the future.

Recommendation of tariffs on EU goods: President Donald Trump has announced that he will recommend 50 per cent tariffs on goods imported from the European Union. Trump justified his proposal by the difficulties in trade cooperation with the EU. This announcement triggered a violent reaction on financial markets in both Europe and the United States. European stock indices, recorded sharp declines and the euro gave back earlier gains. Futures on US stock indices also recorded significant declines following the statement.

Events worth watching this week

EU reaction to the tariff recommendations: Last Friday, USA President Donald Trump again recommended tariffs on goods from the European Union, despite an earlier suspension of tariffs for 90 days in April. Markets reacted strongly to this declaration, but the European Union authorities and the European Central Bank left the announcement without official comment. A response from Europe or negotiations on the non-imposition of tariffs could have an impact on rapid and significant fluctuations in currency prices.

Important data at the start and end of the week: Monday will see the publication of unemployment rate and retail sales readings, despite the holidays in the UK and US (which means no handling of interbank currency transfers in the pound and dollar). On the other hand, CPI from Poland, Germany and the USA will be known on Friday. These are important data, especially for our economy. Positive readings of these macroeconomic indicators may strengthen the zloty, while an increase in unemployment or a decrease in retail sales may result in a weakening of the Polish currency.

TREASURY DEPARTMENT

AFORTI.BIZ