Market Summary by AFORTI: The break-up of OPEC, interest rates held steady, declaration of an end to hostilities in Iran

Last week, the markets were dominated by the historic collapse of the OPEC group following the UAE’s withdrawal and the escalation of diplomatic tensions between the US and Germany. The oil shock triggered a 2.75% rise in Brent crude prices, whilst gold prices fell by 2.12% and the domestic WIG index by 1.64%. The zloty held its value against the euro and the dollar. In the coming week, investors’ attention will focus on Wednesday’s NBP decision on interest rates and key data from the US labour market (NFP).  

Economic indicators

Poland

1. CPI (y/y) (April) Actual: 3.2%; forecast: none; previous: 3.0%;
2. CPI (m/m) (April) Actual: 0.6%; forecast: none; previous: 1.1%;

Eurozone

1. CPI (y/y) (April) Actual: 3.0%; forecast: 3.0%; previous: 2.6%;
2. Unemployment rate (March): 6.2%; forecast: 6.2%; previous: 6.3%;
3. GDP (quarter-on-quarter) (Q1) Actual: 0.1%; forecast: 0.2%; previous: 0.2%;
4. GDP (year-on-year) (Q1) Actual: 0.8%; forecast: 0.9%; previous: 1.2%;
5. Interest rate decision (April): actual 2.15%; forecast 2.15%; previous 2.15%;
6. Deposit rate (April): actual 2.00%; forecast 2.00%; previous 2.00%;

Germany

1. Unemployment rate in Germany (April): actual 6.4%; forecast 6.3%; previous 6.4%;
2. Change in unemployment in Germany (April): actual 20K; forecast 4K; previous 3K;
3. German GDP (q/q) (Q1) P: actual 0.3%; forecast 0.1%; previous 0.2%;
4. German GDP (y/y) (Q1) P: actual 0.3%; forecast 0.3%; previous 0.4%;
5. German retail sales (m/m) (March): actual -2.0%; forecast -0.3%; previous -0.3%;
6. German retail sales (y/y) (March): actual -2.0%; forecast 0.5%; previous 0.9%;

France

1. France’s GDP (y/y) (Q1) Actual: 1.1%; forecast: none; previous: 1.3%;
2. France’s GDP (q/q) (Q1) Actual: 0.0%; forecast: 0.2%; previous: 0.2%;
3. France CPI (m/m) (April) Actual: 1.0%; forecast: 0.9%; previous: 1.0%;
4. France HICP (m/m) (April) Actual: 1.2%; forecast: 0.9%; previous: 1.1%;
5. CPI in France (y/y) (April) Actual: 2.2%; forecast: 2.0%; previous: 1.7%;
6. HICP in France (y/y) (April) Actual: 2.5%; forecast: 2.3%; previous: 2.0%;

United Kingdom

1. Interest rate decision (April): actual 3.75%; forecast 3.75%; previous 3.75%;
2. BoE MPC: number of votes in favour of cutting interest rates (April): actual 0; forecast 0; previous 0;
3. BoE MPC: number of votes in favour of raising interest rates (April): actual 1; forecast 1; previous 0;
4. BoE MPC: number of votes in favour of keeping interest rates unchanged (April): actual 8; forecast 8; previous 9;
5. Manufacturing PMI (April): actual 53.7; forecast 53.6; previous 51.0;
6. CBI Retail Trade Survey (April): actual -68; forecast -42; previous 52;

USA

1. Conference Board Consumer Confidence Index (April): actual 92.8; forecast 89.0; previous 92.2;
2. GDP (q/q) (Q1) P: actual 2.0%; forecast 2.2%; previous 0.5%;
3. Core Personal Consumption Expenditures (PCE) price index (y/y) (March): actual 3.2%; forecast 3.2%; previous 3.0%;
4. Core Personal Consumption Expenditures (PCE) price index (month-on-month) (March): actual 0.3%; forecast 0.3%; previous 0.4%;
5. Initial jobless claims: actual 189K; forecast 213K; previous 215K;
6. Employment Cost Index (q/q) (Q1): actual 0.9%; forecast 0.8%; previous 0.7%;
7. Claims for unemployment benefits: actual 1,785K; forecast 1,820K; previous 1,808K;
8. Chicago PMI (April): actual 49.2; forecast 54.8; previous 52.8;
9. ISM Manufacturing Index (April): actual 52.7; forecast 53.1; previous 52.7;
10. ISM Manufacturing Employment Index (April): actual 46.4; forecast 49.0; previous 48.7;

China

1. Manufacturing PMI (April): actual 50.3; forecast 50.1; previous 50.4;
2. Services PMI (April): actual 49.4; forecast 49.9; previous 50.1;
3. Caixin Manufacturing PMI (month-on-month) (April): actual 52.2; forecast 50.9; previous 50.8;
4. Industrial profit in China, YTD (March): actual 15.5%; no forecast; previous 15.2%;
5. China Composite PMI (April): actual 50.1; no forecast; previous 50.5;

Currency market

This week, the euro (EUR) strengthened against the zloty (PLN) by 0.03%. The euro traded in the range of 4.2392 – 4.2645. 

In contrast, the dollar (USD) weakened against the zloty (PLN) by 0.08%. The dollar’s price fluctuated between 3.6035 and 3.6567.  

Oil and gold markets

The price of Brent crude rose by 2.75%. The price fluctuated between 93.07 and 107.44 USD per barrel.  

Gold, however, fell by 2.12%. The price of gold fluctuated between 4,526.05 and 4,743.94 USD per ounce.  

Stock Exchange

The WIG index fell by 1.64%. The WIG index fluctuated between 127,861 and 130,945. 

Key events from the past week

The historic break-up of OPEC: The United Arab Emirates’ withdrawal from OPEC after 59 years marks a historic shift in the architecture of the energy market. This decision, taken without consultation with Saudi Arabia, brings an end to Abu Dhabi’s period of strict production discipline. Having regained full autonomy, the UAE plans to increase production to 5 million barrels per day by 2027. This unprecedented move, which undermines existing price control mechanisms, has met with enthusiastic support from President Donald Trump, heralding a new era in US-Middle East relations.

Interest rates unchanged: Global monetary policy remains in a wait-and-see phase following the Fed and ECB’s decisions to keep interest rates on hold. In the US, the cost of borrowing remains in the 3.50–3.75% range, with deep divisions within the committee on the eve of Kevin Warsh taking the helm. Despite the pause, markets do not foresee imminent cuts across the Atlantic due to inflationary pressure caused by the oil shock. In the Eurozone, meanwhile, with the deposit rate at 2.00%, the market is pricing in a hawkish shift and expects three rate hikes before the end of the year.

Diplomatic and market aspects of the conflict with Iran: President Donald Trump has officially notified Congress of the end of hostilities with Iran, a legal manoeuvre designed to circumvent parliamentary restrictions. However, this declaration is largely formal in nature, as actual military operations in the region continue unabated. The US Navy continues to maintain a tight blockade of Iranian ports, effectively preventing the transport of raw materials. This discrepancy between political rhetoric and the situation at sea is keeping the risk premium high, causing global oil prices to remain steadily above $100 per barrel.

US-Germany diplomatic tensions: Transatlantic relations have cooled sharply following Chancellor Merz’s criticism of US strategy. In response, the Pentagon confirmed plans to withdraw 5,000 troops from Germany, which undermines Berlin’s existing security guarantees. At the same time, the US administration has announced a return to protectionism, threatening to impose 25% tariffs on the European automotive sector. Such drastic retaliatory measures deal a direct blow to the foundations of German exports, posing the risk of massive losses for key car manufacturers and destabilising the alliance within NATO structures.

Poland as the region’s strategic energy hub: Poland is strengthening its position as a strategic energy hub, securing full US support for its plan to distribute LNG in Central and Eastern Europe. The initiative utilises the infrastructure in Świnoujście and the new FSRU unit in Gdańsk, which is ultimately intended to make the region independent of Russian raw materials. Thanks to the redistribution of gas to Ukraine and the Baltic states, Warsaw gains a significant tool for geopolitical influence. This project not only guarantees an increase in regional security but also generates multi-billion-zloty revenues from re-exports, permanently altering the balance of power in this part of the continent.

Events worth watching this week

Outlook for the zloty: The key event for the zloty will be Wednesday’s interest rate decision (6 May). A day later, we will see data on foreign exchange reserves. Investors will assess these announcements in the light of the recent, surprising surge in inflation, which will determine short- and medium-term sentiment towards the domestic currency in the face of mounting price pressures and market uncertainty.

Outlook for the euro: The euro’s performance will depend on the PMI readings for manufacturing (4 May) and services (6 May). Thursday’s retail sales data and Friday’s German reports on production and the trade balance will also be significant. The combined data will allow markets to assess the actual pace of economic recovery in the Eurozone and the sustainability of the upward trend.

Outlook for the dollar: The dollar will be heavily influenced by labour market data: the ADP report (6 May) and the key NFP figures on Friday (8 May). Earlier, sentiment will be shaped by Tuesday’s ISM services index. This data will help investors assess the state of the US economy and the Fed’s future actions in the context of US consumer resilience to macroeconomic shocks.

Outlook for the pound: Following Monday’s bank holiday, pound investors’ attention will focus on the PMI indices for services and construction (6–7 May). However, the highlight of the week will be Friday’s speech by BoE Governor Andrew Bailey. His remarks will provide key insights into future monetary policy and potential timelines for interest rate adjustments in the UK.

TREASURY DEPARTMENT

AFORTI.BIZ