Market Summary by AFORTI: ‘Liberation Day’ in the USA, response to tariffs, significant weakening of the zloty, possible interest rate cut in Poland.

Economic indicators

Poland:

1. CPI (y/y): 4.9%; forecast 5.1%; previously 4.7%;

2. CPI (m/m): 0.1%; forecast 0.3%; previously 0.0%;

3. CPI (y/y) P: 2.5%; forecast no data; previously 2.3%;

4. Manufacturing PMI: value 50.70; forecast 50.90; previously 50.60;

5. Interest rate decision: value 5.75%; forecast 5.75%; previously 5.75%;

Eurozone:

1. CPI (y/y): value 2.2%; forecast 2.2%; previously 2.3%;

2. CPI (m/m): value 0.6%; forecast no data; previously 0.4%;

3. Unemployment rate: value 6.1%; forecast 6.2%; previously 6.2%;

4. Core CPI (y/y) P: value 2.4%; forecast 2.5%; previously 2.6%;

5. Core CPI (m/m) P: value 1.0%; forecast no data; previously 0.5%;

6. CPI (m/m): value 0.3%; forecast 0.4%; previously 0.6%;

Germany:

1. CPI (y/y) P: value 2.2%; forecast 2.2%; previously 2.3%;

2. Retail sales (m/m): value 0.8%; forecast 0.0%; previously 0.7%;

3. PMI for industry: value 48.3; forecast 48.4; previously 46.5;

4. Import price index (m/m): value 0.3%; forecast 0.0%; previously 1.1%;

5. PMI for services: value 50.9; forecast 50.2; previously 51.1;

6. Factory orders (m/m): value 0.0%; forecast 3.4%; previously -5.5%;

France:

1. PMI for industry: value 48.5; forecast 48.9; previously 45.8;

2. Services PMI: value 47.9; forecast 46.6; previously 45.3;

3. Industrial production (m/m): value 0.7%; forecast 0.5%; previously -0.5%;

4. Government budget balance: value -40.3B; forecast -30.2B; previously -17.3B;

5. S&P Global composite PMI: value 48.0; forecast 47.0; previously 45.1;

United Kingdom:

1. Human Poverty Index (HPI) (y/y): value 3.9%; forecast no data; previously 3.9%;

2. Manufacturing PMI: value 50.70; forecast 50.90; previously 50.60;

3. Services PMI: value 52.5; forecast 53.2; previously 51. 0;

4. M4 money supply (m/m): value 0.2%; forecast 1.1%; previously 1.4%;

5. Composite PMI: value 51.5; forecast 52.0; previously 50.5;

6. Construction PMI: value 46.4; forecast 46.3; previously 44.6;

USA:

1. Manufacturing PMI: value 50.2; forecast 49.8; prior 52.7;

2. Construction spending (m/m): value 0.7%; forecast 0.3%; prior -0.5%;

3. Services PMI: value 54.4; forecast 54.3; prior 51.0;

4. Chicago PMI: value 47.6; forecast 45.5; prior 45.5;

5. Factory orders (m/m): value 0.6%; forecast 0.5%; prior 1.8%;

6. Average hourly earnings (m/m): value 0.3%; forecast 0.3%; prior 0.2%;

7. Change in nonfarm employment: value 228K; forecast 137K; prior 117K;

8. Unemployment rate: value 4.2%; forecast 4.1%; previously 4.1%;

9. Trade balance: value -122.70B; forecast -122.50B; previously -130.70B;

10. Unemployment claims: value 1,903K; forecast 1,860K; previously 1,847K;

China:

1. Composite PMI: value 51.4; forecast no data; previously 51.1;

2. Services PMI: value 50.8; forecast 50.5; previously 50.4;

3. Caixin Services PMI: value 51.9; forecast 51.5; previously 51.4;

Foreign Exchange Market

This week, the euro (EUR) strengthened against the zloty (PLN) by 2.02%. The price of the euro fluctuated between 4.1659 and 4.2735.

The dollar (USD) also finally strengthened against the zloty (PLN) after a large decline of 0.74%. The dollar price oscillated in a range of 3.7644 - 3.9089.

Oil and gold market

The price of BRENT crude oil rose by as much as 8.94% and oscillated in a range of 64.15 - 75.39 USD/barrel.

The gold price fell by 2.58%, and settled in a range of USD 3036.76 - 3189.30/ounce.

Stock Exchange

Similar to foreign stock exchanges, it was a week of declines on the WSE. The price of the WIG index fell by 8.98% and oscillated between 88 833 - 98 006.

Cryptocurrencies

The price of Bitcoin (BTC) fell by 3.78% this week and oscillated between 312 582 - 337 899.

Important events of the past week

“Liberation Day” in the USA: The previous week, USA President Donald Trump announced significant tariff increases, calling it “Liberation Day”. The average tariff rate is set to rise from 2 per cent to as much as 22 per cent, the biggest protectionist shift in more than a century. US Trade Minister Howard Lutnick said that tariff talks are underway with all major countries around the world, and the key is whether they will accept US agricultural products and treat the USA fairly. Trump's decision triggered an unprecedented increase in tariffs.

The response to Donald Trump's tariffs: In response to the introduction of tariffs by the USA, other countries retaliated and expressed their displeasure. The European Union announced the preparation of further countermeasures in response to the US steel tariffs, having already taken the first package of measures. Canada has imposed a 25 per cent duty on cars imported from the USA that do not comply with the USMCA. China, on the other hand, announced retaliatory tariffs of 34 per cent on all USA imports, as well as export controls on certain rare earth metals.

Stock market declines: Donald Trump's announcement of tariffs triggered a sharp discount on Wall Street, the biggest since the coronavirus pandemic. The S&P 500 index lost 4.8 per cent and the technology Nasdaq fell 5.4 per cent, marking its worst day since September 2022. According to the Wall Street Journal's calculations, the New York Stock Exchange lost US$6.4 trillion in two days (for comparison, Poland's GDP in 2024 was around US$823 billion). Companies with strong links to international trade, including clothing, footwear and electronics manufacturers, were hit hardest.

Possible interest rate cut: The President of the National Bank of Poland, Adam Glapinski, suggested that he was ready to start a cycle of interest rate cuts as early as May. The market perceived this as a signal of a dovish turn in monetary policy. The cuts could amount to 25 or even 50 basis points, depending on the government's decision on energy prices. The NBP governor himself would be willing to support a proposal for a 0.5ppt cut if the government keeps household energy prices low until the end of the year.

Events worth watching this week

The aftermath of the NBP conference: Last week, the Polish interest rate remained unchanged at 5.75%, in line with our predictions. A day later, during a press conference, NBP President Adam Glapinski signalled the possibility of interest rate cuts as early as May. This announcement resulted in a significant weakening of the zloty. Within two days, the euro strengthened by 7 cents against the zloty, the dollar by 12 cents and the Swiss franc by 15 cents. This week, the market is likely to stabilise the value of the zloty, which may result in a correction in the prices of foreign currencies, especially as there are no key macroeconomic data scheduled to be published from Poland in the near future.

USA and German consumer inflation indicators: Consumer inflation data will be published this week. On Thursday, the CPI from the United States will be published at 14:30, which could have an impact on the dollar exchange rate. On the other hand, the same indicator is scheduled to be published on Friday morning for Germany, which, as the largest economy in the euro area, has a significant impact on the value of the euro. According to economic theory, a higher inflation reading should result in a strengthening of the currency, while a lower reading causes it to weaken.

TREASURY DEPARTMENT

AFORTI.BIZ