Market Summary by AFORTI: Truce fails, RPP reverses course, trade ultimatum for the EU

Last week, the markets were dominated by military tensions in the Middle East, the hawkish shift by the Governor of the National Bank of Poland, and the US trade ultimatum to the European Union. The price of Brent crude fell by 7.57%, whilst gold prices rose by 2.14% and the domestic WIG index by 1.34%. The zloty strengthened against the euro and the dollar. In the coming week, investors’ attention will focus on Polish GDP and inflation, as well as US consumer price index (CPI) data.

Economic indicators

Poland

1. Manufacturing PMI (April): actual 48.80; forecast 48.70; previous 48.70;
2. Interest rate decision (May): actual 3.75%; forecast 3.75%; previous 3.75%;
3. EUR foreign exchange reserves (April): actual 254.77B; forecast not available; previous 253.53B;

Eurozone

1. PPI y/y (March): actual 2.1%; forecast 1.8%; previous -3.0%;
2. Manufacturing PMI (April): actual 52.2; forecast 52.2; previous 51.8;
3. Sentix investor sentiment (May): actual -15.4; forecast -20.9; previous -19.2;
4. S&P Global Composite PMI (April): reading 48.8; forecast 48.8; previous 50.7;
5. PPI m/m (March): reading 3.4%; forecast 3.3%; previous -0.8%;

Germany

1. Germany Manufacturing PMI (April): actual 51.4; forecast 51.2; previous 52.2;
2. Germany Services PMI (April): actual 48.9; forecast 48.9; previous 50.9;
3. Germany Composite PMI (April): actual 48.4; forecast 48.3; previous 51.9;
4. German factory orders m/m (March): actual 5.0%; forecast 1.0%; previous 1.4%;
5. German industrial production m/m (March): actual -0.7%; forecast 0.4%; previous -0.5%;
6. German trade balance (March): actual 14.3B; forecast 17.8B; previous 19.5B;

France

1. France Manufacturing PMI (April): actual 52.8; forecast 52.8; previous 50.0;
2. France Services PMI (April): actual 48.5; forecast 48.5; previous 48.8;
3. S&P Global Composite PMI in France (April): actual 47.6; forecast 47.6; previous 48.8;
4. Industrial production in France m/m (March): actual 1.0%; forecast 0.5%; previous -0.9%;
5. Exports in France (March): actual 52.5B; forecast not available; previous 57.0B;
6. France’s trade balance (March): actual -8.9B; forecast -6.7B; previous -5.5B;

United Kingdom

1. Composite PMI (April): actual 52.6; forecast 52.0; previous 50.3;
2. Services PMI (April): actual 52.7; forecast 52.0; previous 50.5;
3. Construction PMI (April): actual 39.7; forecast 45.8; previous 45.8;
4. Halifax house price index m/m (April): actual -0.1%; forecast 0.0%; previous -0.5%;
5. GBP mortgage rates (April): actual 6.60%; forecast not available; previous 6.60%;
6. New car registrations y/y (April): actual 24.0%; forecast not available; previous 8.6%;

USA

1. Trade balance (March): actual -$60.30bn; forecast -$61.00bn; previous -$57.80bn;
2. Services PMI (April): actual 51.0; forecast 51.3; previous 49.8;
3. ISM Services Index (April): actual 53.6; forecast 53.7; previous 54.0;
4. JOLTS Job Openings and Labour Turnover Survey (March): actual 6.866M; forecast 6.860M; previous 6.922M;
5. ADP non-farm payrolls (April): actual 109K; forecast 118K; previous 61K;
6. Crude oil inventories: actual -2.313M; forecast -3.400M; previous -6.234M;
7. Initial jobless claims: actual 1,766K; forecast 1,800K; previous 1,778K;
8. Non-farm payrolls (April): actual 115K; forecast 65K; previous 185K;
9. Unemployment rate (April): actual 4.3%; forecast 4.3%; previous 4.3%;
10. University of Michigan Consumer Sentiment Index, final (May): actual 48.5; forecast 48.1; previous 48.1;

China

1. Caixin Services PMI (April): actual 52.6; forecast 52.0; previous 52.1;
2. USD foreign exchange reserves (April): actual 3.411T; no forecast; previous 3.342T;

Currency market

This week, the euro (EUR) weakened against the zloty (PLN) by 0.15%. The euro traded in the range of 4.2250 – 4.2611. 

Similarly, the dollar (USD) weakened against the zloty (PLN) by 0.54%. The dollar’s price fluctuated between 3.5846 and 3.6471.  

Oil and gold markets

The price of Brent crude fell by as much as 7.57%. The price fluctuated between 96.27 and 114.90 USD per barrel.  

Gold, on the other hand, rose by 2.14%. The price of gold fluctuated between 4,517.84 and 4,774.64 USD/ounce.  

Stock Exchange

The WIG index rose by 1.34%. The WIG index fluctuated between 127,804 and 133,735. 

Key events from the past week

The collapse of the ceasefire in the Middle East: The initial optimism surrounding the 14-point US-Iran agreement and the reopening of the Strait of Hormuz quickly faded. Instead of bringing stability, the US Operation Freedom led to a rapid military escalation. Following Iranian shelling of the destroyers USS Truxtun and USS Mason, the US Navy sank six Revolutionary Guard vessels in retaliation. The situation was exacerbated by attacks on a port in the United Arab Emirates and the resumption of Israeli air strikes on Lebanon, which ultimately dashed any hopes of maintaining the fragile peace.

Hawkish shift by the RPP: Despite keeping the reference rate at 3.75%, the narrative of the NBP Governor has become markedly more hawkish. Adam Glapiński emphasised that the scenario of rate cuts has been postponed to an unspecified future. The dominant risk currently remains the need for further monetary tightening in the face of persistent core inflation and the fuel shock. The debt market reacted immediately – investors have already begun to price in hikes of 50–75 basis points.

Trade ultimatum for the EU: President Donald Trump has reverted to aggressive rhetoric in relations with Europe. Following a conversation with European Commission President Ursula von der Leyen, the US leader issued Brussels with a tough ultimatum: the EU has until 4 July to fully implement the trade agreement. Failure to meet these demands by the deadline will result in the immediate imposition of punitive tariffs on goods imported from EU member states, putting transatlantic relations on a knife-edge.

The twilight of the petrodollar and the flight to gold: The foundations of the petrodollar system are being systematically eroded. The dominance of the US currency is being undermined not only by the decisions of Arab states and the UAE’s exit from OPEC, but also by the offensive of the BRICS nations, which are pushing for settlements in yuan. A global decline in confidence in the dollar is driving a massive diversification of reserves. Leading the way in this trend is the National Bank of Poland, which, thanks to aggressive purchases, has already accumulated 580 tonnes of gold, becoming one of the key players in the bullion market.

OKI scheme: The Polish government has adopted a draft bill on Personal Investment Accounts (OKI), scheduled to launch on 1 January 2027. The new instrument is intended to encourage Poles to save by exempting stock market investments up to PLN 100,000 and deposits up to PLN 25,000 from the ‘Belka tax’. According to estimates by the Ministry of Finance, OKI could inject as much as PLN 5 billion a year into the Warsaw Stock Exchange, providing a massive injection of fresh capital into the domestic capital market.

Events worth watching this week

Outlook for the zloty: In the coming week, preliminary GDP growth figures, due on Thursday 14 May, will be key for the zloty’s valuation. On Friday, 15 May, investors’ attention will focus on the publication of the CPI inflation rate and data on Poland’s current account balance. These key macroeconomic releases will ultimately determine sentiment surrounding the domestic currency, influencing its volatility and market strength in the near term.

Outlook for the euro: The single currency’s exchange rate will react strongly to the release of Germany’s CPI and the ZEW economic sentiment index for the Eurozone, scheduled for Tuesday, 12 May. A day later, on Wednesday, 13 May, markets will analyse the preliminary readings for GDP growth and industrial production. Speeches by ECB President Christine Lagarde, scheduled for Wednesday 13 May and Thursday 14 May, will also provide important guidance for investors.

Outlook for the dollar: The US dollar may experience heightened volatility following the release of consumer price inflation data on Tuesday, 12 May, and producer price inflation on Wednesday, 13 May. Retail sales and initial jobless claims figures, due on Thursday 14 May, will also provide significant insights into the state of the economy. The week will culminate with the industrial production report scheduled for Friday 15 May.

Outlook for the pound: The British pound will be heavily influenced by the busy macroeconomic calendar scheduled for Thursday, 14 May, when key readings on GDP growth and industrial production will be released. Ahead of this, markets will be listening closely to speeches by Bank of England officials: Deputy Governor Woods on Monday, 11 May, and MPC member Mann on Wednesday, 13 May. These events will help investors gauge the potential direction of monetary policy.

TREASURY DEPARTMENT

AFORTI.BIZ