Market Summary by AFORTI: Military attack on Iran, consequences of tariff removal, rise in unemployment in Poland

Last week, weak macroeconomic data from Poland, including a jump in the unemployment rate to 6.0% and a drastic decline in the number of job offers, as well as the military attack on Iran and Tehran's response, and the US Supreme Court's repeal of Trump's tariffs, were key factors. Global markets saw a sharp rise in oil prices amid fears of an energy crisis and a strengthening of the Swiss franc, while supply chains were paralysed by retaliation from drug cartels in Mexico. In the coming week, investors' attention will focus on the MPC's decision on interest rates in Poland, as well as key data from the US labour market (NFP) and inflation readings in the Eurozone, which will shape market expectations regarding the future steps of central banks.

Economic indicators

Poland

1. Retail sales (y/y) (January): value 3.9%; forecast 3.1%; previous 5.0%;
2. M3 money supply (y/y) (February): actual 10.0%; forecast 10.4%; previous 10.4%;
3. Car registrations (m/m) (January): actual -40.60%; previous 38.30%;
4. Car registrations (y/y) (January): value -9.00%; previously 21.70%;
5. Unemployment rate (January): value 6.0%; forecast 6.0%; previously 5.7%;

Eurozone

1. CPI (y/y) (January): value 1.7%; forecast 1.7%; previously 1.9%;
2. Core CPI (y/y) (January): value 2.2%; forecast 2.2%; previously 2.3%;
3. Business and consumer survey (February): actual 98.3; forecast 99.8; previous 99.3;
4. M3 money supply (y/y) (January): actual 3.3%; forecast 2.9%; previous 2.8%;
5. CPI (m/m) (January): value -0.6%; forecast -0.5%; previous 0.2%;
6. CFTC: Net speculative positions in EUR: value 156.9K; previous 174.5K;

Germany

1. Ifo Business Climate Index in Germany (February): value 88.6; forecast 88.4; previous 87.6;
2. CPI in Germany (m/m) (February) P: value 0.2%; forecast 0.5%; previous 0.1%;
3. CPI in Germany (y/y) (February) P: value 1.9%; forecast 2.0%; previously 2.1%;
4. Unemployment rate in Germany (February): value 6.3%; forecast 6.3%; previously 6.3%;
5. German GDP (q/q) (Q4): actual 0.3%; forecast 0.3%; previous 0.0%;
6. Change in German unemployment (February): actual 1K; forecast 2K; previous 1K;

France

1. France GDP (q/q) (Q4): actual 0.2%; forecast 0.2%; previous 0.2%;
2. France Consumer spending (m/m) (January): actual 0.5%; forecast 0.4%; previous -0.5%;
3. CPI in France (m/m) (February) P: value 0.7%; forecast 0.5%; previously -0.3%;
4. Total number of unemployed in France (January): value 3090.5K; previously 3117.4K;
5. France GDP (y/y) (Q4): value 1.1%; forecast 1.1%; previous 0.9%;
6. Business climate in France (February): value 102; forecast 104; previous 105;

United Kingdom

1. GfK consumer confidence index (February): value -19; forecast -15; previous -16;
2. CBI distribution trade survey (February): value -43; forecast -27; previously -17;

USA

1. PPI index (m/m) (January): value 0.5%; forecast 0.3%; previously 0.4%;
2. Chicago PMI Index (February): value 57.7; forecast 52.0; previous 54.0;
3. Construction spending (m/m) (December): value 0.3%; forecast 0.2%; previous -0.1%;
4. Crude oil inventories: actual 15.989M; forecast 1.800M; previous -9.014M;
5. Initial jobless claims: actual 212K; forecast 217K; previous 208K;
6. Jobless claims: value 1833K; forecast 1860K; previous 1864K;
7. ADP weekly employment change: value 12.80K; previous 11.50K;
8. Conference Board Consumer Confidence Index (February): actual 91.2; forecast 87.4; previous 89.0;
9. Factory orders (m/m) (December): actual -0.7%; forecast -0.4%; previous 2.7%;
10. Core PPI (y/y) (January): value 3.6%; forecast 3.0%; previous 3.3%;

China

1. PBoC base lending rate (February): value 3.50%; forecast 3.50%; previous 3.50%;
2. PBoC base lending rate: value 3.00%; forecast 3.00%; previously 3.00%;

Currency market

This week, the euro (EUR) strengthened against the Polish zloty (PLN) by 0.07%. The euro traded in the range of 4.2146 – 4.2269. 

The US dollar (USD) weakened against the Polish zloty (PLN) by 0.21%. The dollar traded in the range of 3.56.52 – 3.5896. 

Oil and gold market

The price of Brent crude oil rose by 2.16%. The price fluctuated between 69.32 and 73.40 USD/barrel.  

Similarly, gold rose by 3.26%. The price of gold fluctuated between 5,121.96 and 5,296.76 USD/ounce.  

Stock exchange

The WIG index rose by 1.37%. The WIG index price fluctuated between PLN 124,770 and PLN 127,902.

Cryptocurrencies

The price of Bitcoin (BTC) fell by 0.62% and fluctuated between PLN 230,001 and PLN 251,900.  

Important events of the past week

Armed attack on Iran: Last weekend, US and Israeli forces carried out precision strikes on key military targets in Iran, resulting in the death of Supreme Leader Ali Khamenei. Tehran responded with a massive attack involving hundreds of drones and missiles and a blockade of the strategic Strait of Hormuz, causing immediate turmoil in the markets. The rapid escalation pushed Brent crude oil contract prices up by 10% (to USD 80 per barrel), raising fears of a long-term energy crisis. At the same time, investors' retreat to ‘safe havens’ significantly strengthened the Swiss franc, which reached its highest exchange rate against the euro since 2015.

The aftermath of Trump's tariffs being overturned: The Supreme Court's ruling that Trump's tariffs were unlawful caused a wave of turmoil that went beyond Wall Street's enthusiastic reaction. In response to what the White House called a ‘scandalous’ ruling, the administration immediately launched an alternative scenario, announcing the implementation of a new 15% tariff based on other legal grounds. This sudden reversal deepened the logistical chaos and triggered an avalanche of claims. The giant FedEx has already filed a lawsuit against the federal government, demanding the return of nearly $1 billion in illegally collected levies, which have drastically reduced the company's revenues in recent quarters.

Unemployment surge in Poland: January's macroeconomic data from the Polish labour market caused deep concern, signalling the definitive end of the ‘employee's market’ era. The unemployment rate rose to 6.0%, meaning that nearly one million people remain unemployed – the highest figure since 2021. The situation is exacerbated by a drastic decline in the number of job offers; with only 26,300 vacancies available, the ratio of unemployed people per job offer has risen to nearly 35. These figures are another strong argument for lowering interest rates at the next MPC meeting, scheduled for Wednesday, 4 March.

Cartel war in Mexico: The elimination of the head of the most powerful drug cartel, ‘El Mencho’, by the Mexican army triggered bloody retaliation by criminal groups in several states across the country. Militants blocked 252 key transport arteries and carried out a series of arson attacks, targeting, among others, facilities belonging to the American Walmart chain. The sudden logistical paralysis directly affected supply chains for the automotive and electronics industries in the US, causing huge economic losses and calling into question the security of the upcoming World Cup in Mexico.

Events worth watching this week

Outlook for the zloty: The week for the Polish currency will begin with the publication of the PMI index for industry and GDP growth data for the fourth quarter (Monday, 2 March). However, the absolutely key event will be the Monetary Policy Council's (RPP) decision on interest rates, which will be announced on Wednesday, 4 March. In the context of recent data on rising unemployment, investors' eyes will be on the statement following the meeting. The week will close with Friday's data on the NBP's official reserve assets.

Outlook for the euro: Tuesday's CPI and core inflation readings in the eurozone (3 March) will be decisive for the single currency's exchange rate. The publication of the minutes of the ECB meeting (Thursday, 5 March) and Eurozone GDP data (Friday, 6 March) will also have a significant impact on volatility. Throughout the week, markets will closely analyse numerous speeches by President Christine Lagarde, looking for signals about the central bank's future moves.

Outlook for the dollar: The dollar will remain strongly influenced by the geopolitical premium following the attacks on Iran, which, in conditions of increased volatility, stimulates demand for safe havens. However, the key event on the calendar will be Friday's labour market report (NFP), which, together with unemployment rate data, will determine market sentiment at the end of the week. The picture of the US economy will be complemented by earlier publications: the ADP report scheduled for Wednesday and Thursday's data on the number of new claims for benefits.

Outlook for the pound: The pound's trading will be dominated by Tuesday's publication of the Spring Budget, which will outline the direction of UK fiscal policy. The picture of the economy will be complemented by a series of PMI readings: for manufacturing (Monday), services (Wednesday) and construction (Thursday). The week will end with Friday's real estate market data in the form of the Halifax house price index.

TREASURY DEPARTMENT

AFORTI.BIZ