Poles celebrate as stock markets recover losses. The economic engine of our continent is slightly rusted.
Markets On The Rise
In our country, the long weekend continues, so trade and therefore liquidity is almost “dead”. This cannot be said for global markets, where losses from early August sales are actively being recovered. The German DAX gained almost 1%, while the results on the American stock market, where over 1.5% growth was recorded, were even more impressive. Today, this great streak continues, with a dominant green color on stock exchanges. It’s worth emphasizing that we’ve virtually erased the August losses. It is likely that the turmoil which hit the markets due to a disastrous job market report, is being forgotten. Thus, we can finish the holiday month with a plus.
Investors Back in Rose-colored Glasses
Now let’s get to the heart of the situation. Just as previous losses were closely connected to the ghost of recession (due to weaker indicators on the American job market), so are the current gains a consequence of the recession scenario moving away. Soft landing of the US economy is now expected. It took very little, basically two macro items, to draw this conclusion. The retail sales in the States have grown significantly m/m. The 1% result surprised analysts who expected a level of 0.4%. The second positive turn was the number of new jobless claims, which was much lower than forecasted – 227 thousand vs 235 thousand. Thus investors quickly concluded that the vision of a recession was exaggerated, and the economy is not as bad as may have seemed. Looking at the FX market, particularly the EUR/USD pair, the impact of the latest events is not visible, however optimism is blowing strongly across the stock markets.
Bad News for Poland
Although the situation in the USA looks good, looking at the economic engine of Europe, the largest economy of the continent, we notice significant problems. Analysts constantly lower growth perspectives. For this year, the growth is expected to be only 0.1%, although it is expected to be better next year (1.1%). One could say that riding with such a “rusted engine”, eurozone will not get far. However, surprisingly, the driving engines have become the almost habitual troubled countries of the South. The Italian economy is expected to grow at a rate of 0.8%, and Spain’s economy looks even more spectacular with a result of 2.6%. Such poor information from our Western neighbours is not good for Poland, as Germany is still our main trading partner. For now, EUR/PLN is dropping below 4.2750.
Author: Krzysztof Pawlak, currency analyst Walutomat.pl
Source: https://ceo.com.pl/oddech-ulgi-na-rynkach-gieldy-odrabiaja-straty-53472
