The main stock indices closed the day with significant gains. The Nasdaq Composite rose by 1%, while the S&P 500 grew by 0.8%, and the Dow Jones increased by 0.5%. The first two mentioned benchmarks set new historical records. Yields on European and American government bonds also increased. A slight improvement in sentiment led to the strengthening of the Polish zloty. The EUR/PLN exchange rate fell from 4.38 to below 4.35. The Swiss franc slightly weakened, following a significant appreciation against both the euro and the US dollar last week.
Yesterday’s macroeconomic calendar was moderately filled. Data from China was released overnight from Sunday to Monday. Improved retail sales and stable investment growth in May suggest that China’s economy grew at a less uneven pace compared to previous months. This is certainly an optimistic signal, but investors will want to see more positive growth signals. Much will depend on the government. The third session of the Communist Party of China is scheduled for July, and structural reforms are expected to support China’s economic transformation.
From Poland, we received the results of core inflation. The index dropped from 4.1% to 3.8%, the lowest level in nearly three years. The zloty did not react significantly to the publication. At the moment, global factors (overall results of the European Parliament elections, political situation in France) are determining the strength of the PLN, which led to last week’s depreciation. Regarding the dynamics of price growth in Poland, it is evident that disinflation is progressing. As for the budget deficit, it increased to 53.1 billion PLN in May from 39.9 billion PLN the previous month.
Today’s focus will be on the US retail sales data for May. The market will assess the current strength of the consumer and, in this perspective, try to evaluate the shape of the future interest rate path in the US. The reading of industrial production results will expand the picture of the current state of the US economy. In both cases, the forecast indicates moderate growth in activity, as April brought stagnation. From Europe, we will see the ZEW index, which is expected to improve from 47.1 to 50 points. Sentiment has been gradually improving since last fall, and this trend will likely be reinforced. Additionally, the central bank of Hungary will once again cut interest rates. The market consensus indicates a reduction of 25 basis points, although a more substantial cut, consistent with the current pace of changes, is not excluded.
**Łukasz Zembik, Oanda TMS Brokers**
